Frontmatter Page
Purposes of the IMF
(i) To promote international monetary co-operation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
(ii) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
(iii) To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
(iv) To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
(v) To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
(vi) In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.
The Fund shall be guided in all its policies and decisions by the purposes set forth in this Article.
Article I of the IMF’s Articles of Agreement
ISSN 0250-7498
ISBN 1-55775-843-3
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431, U.S.A.
Telephone: (202) 623-7430
Telefax: (202) 623-7201
E-mail: publications@imf.org
Internet: http://www.imf.org
LETTER of Transmittal
Annual Report of the Executive Board for the financial year ended April 30, 1999
July 30, 1999
Dear Mr. Chairman:
I have the honor to present to the Board of Governors the Annual Report of the Executive Board for the financial year ended April 30, 1999, in accordance with Article XII, Section 7(a) of the Articles of Agreement of the International Monetary Fund and Section 10 of the IMF’s By-Laws. In accordance with Section 20 of the By-Laws, the administrative and capital budgets of the IMF approved by the Executive Board for the financial year ending April 30, 2000 are presented in Chapter 11. The audited financial statements for the year ended April 30, 1999 of the General Department, the SDR Department, accounts administered by the IMF, and the Staff Retirement Plan and the Supplemental Retirement Benefit Plan, together with reports of the External Audit Committee there on, are presented in Appendix IX.
Yours sincerely,
Michel Camdessus
Chairman
Executive Board
EXECUTIVE BOARD AND Senior Officers as at April 30, 1999
Senior Officers
Michael Mussa
Economic Counsellor
Brian C. Stuart
Director, Administration Department
G.E. Gondwe
Director, African Department
Hubert Neiss
Director, Asia and Pacific Department
Michael C. Deppler
Director, European I Department
John Odling-Smee
Director, European II Department
Shailendra J. Anjaria
Director, External Relations Department
Vito Tanzi
Director, Fiscal Affairs Department
Mohsin S. Khan
Director, IMF Institute
François P. Gianviti
General Counsel, Legal Department
Paul Chabrier
Director, Middle Eastern Department
Stefan Ingves
Director, Monetary and Exchange Affairs Department
Jack Boorman
Director, Policy Development and Review Department
Michael Mussa
Director, Research Department
Reinhard Munzberg
Reinhard Munzberg
Carol S. Carson
Director, Statistics Department
David Williams
Treasurer, Treasurer’s Department
Claudio M. Loser
Director, Western Hemisphere Department
Warren N. Minami
Director, Bureau of Computing Services
Patrick Delannoy
Director, Bureau of Language Services
Ernst-Albrecht Conrad
Director, Office of Budget and Planning
Eduard Brau
Director, Office of Internal Audit and Inspection
Kunio Saito
Director, Regional Office for Asia and the Pacific
Christian Brachet
Director, Office in Europe (Paris)
Grant B. Taplin
Acting Director and Special Trade Representative, Office in Geneva
J.B. Zulu
Director and Special Representative to the UN, Office at the United Nations
David M. Cheney
Chief, Editorial Division
Frontmatter Page
Board of Governors, Executive Board, Interim Committee, and Development Committee
The Board of Governors, the highest decision-making body of the IMF, consists of one governor and one alternate governor for each member country. The governor is appointed by the member country and is usually the minister of finance or the governor of the central bank. All powers of the IMF are vested in the Board of Governors. The Board of Governors may delegate to the Executive Board all except certain reserved powers. The Board of Governors normally meets once a year.
The Executive Board (the Board) is responsible for conducting the day-to-day business of the IMF. It is composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman. The Board usually meets several times each week. It carries out its work largely on the basis of papers prepared by IMF management and staff. In 1998/99, the Board spent more than half of its time on member country matters (regular bilateral consultations and reviews and approvals of financial arrangements) and most of its remaining time on multilateral surveillance and policy issues (such as the world economic outlook exercise, developments in international capital markets, the IMF’s financial resources, the architecture of the international monetary system, the debt situation, and issues related to IMF facilities and program design).
The Interim Committee of the Board of Governors on the International Monetary System is an advisory body made up of 24 IMF governors, ministers, or other officials of comparable rank, representing the same constituencies as in the IMF’s Executive Board. The Interim Committee normally meets twice a year, in April or May, and at the time of the Annual Meeting of the Board of Governors, in September or October. Among its responsibilities are to provide ministerial guidance to the Executive Board and to advise and report to the Board of Governors on issues regarding the management and adaptation of the international monetary system, including sudden disturbances that might threaten the international monetary system, and on proposals to amend the Articles of Agreement.
The Development Committee (the Joint Ministerial Committee of the Boards of Governors of the World Bank and the IMF on the Transfer of Real Resources to Developing Countries) is composed of 24 members—finance ministers or other officials of comparable rank—and generally meets at the same time as the Interim Committee. It advises and reports to the Boards of Governors of the World Bank and the IMF on all aspects of the transfer of real resources to developing countries.
Contents
Letter of Transmittal
Executive Board and Senior Officers
Board of Governors, Executive Board, Interim Committee, and Development Committee
Prefatory Notes
I. Overview
Financial Crises Prompt Consideration of Proposals to Strengthen the Global Financial System
II. The Global Economy
1. Main Developments in the World Economy in 1998/99
Emerging Market Economies
Advanced Economies
2. World Economic Outlook
United States, Japan, and Europe
Crisis-Afflicted Economies
Other Emerging Economies
Preventing Contagion
3. International Capital Markets
Annual Review
Asian Crisis and Other Emerging Market Developments
Mature Market Countries
Interim Review
Factors Behind Markets’ Response
Role of Public Policy
III. The IMF in 1998/99
4. Evolution of the Economic Crisis in Emerging Market Economies
IMF–Supported Programs in Asian Crisis Countries
The Board’s Assessment
Russia and Brazil
5. Strengthening the Architecture of the International Financial System
Transparency, Standards, and Surveillance
Improving Transparency and Accountability of the IMF and Member Countries
Developing Standards for Use by Members
Role of Standards in IMF Surveillance
Strengthening Financial Systems
Capital Account Issues
Involving the Private Sector in Forestalling and Resolving Crises
Intensifying Efforts at Preventing Crises
Measures to Facilitate Private Sector Involvement
Systemic Issues
Implications of Capital Mobility and Exchange Rate Volatility
Developing IMF Facilities
Strengthening IMF Resources
Institutional Reform and Strengthening or Transforming the Interim Committee
6. Surveillance
Bilateral Surveillance
Global and Regional Surveillance
European Economic and Monetary Union
West African Economic and Monetary Union
Experience of Transition Economies
7. Support for Member Countries’ Adjustment
Supplemental Reserve Facility and Contingent Credit Lines
Assistance to Postconflict Countries
Post conflict Countries with Arrears to International Institutions
Access Policy and Limits
Staff-Monitored Programs
Social Issues
Economic Impact of the Kosovo Crisis
Member Countries’ Use of IMF Facilities
Albania
Armenia
Azerbaijan
Bangladesh
Benin
Bolivia
Bosnia and Herzegovina
Brazil
Bulgaria
Burkina Faso
Cameroon
Central African Republic
Republic of Congo
Djibouti
Dominican Republic
El Salvador
Ethiopia
The Gambia
Georgia
Guyana
Haiti
Honduras
Jordan
Kyrgyz Republic
Former Yugoslav Republic of Macedonia
Malawi
Mali
Mozambiqu
Niger
Pakistan
Russia
Rwanda
St. Kins and Nevis
Sierra Leone
Tajikistan
Tanzania
Uganda
Ukraine
Uruguay
Republic of Yemen
Zambia
Zimbabwe
8. The ESAF and the HIPC Initiative
HIPC Initiative
Progress in Implementation
Options for Enhancing the HIPC Initiative
Distilling Lessons from ESAF Evaluations
Design of ESAF-Supported Programs
Implementation of ESAF-Supported Programs
Social Policies in ESAF-Supported Programs
IMF-World Bank Collaboration
Monitoring ESAF-Supported Programs
Financing the ESAF and the HIPC Initiative
9. Technical Assistance and Training
10. Financial Operations and Policies
Membership and Quotas
IMF Liquidity and Borrowing
General Resources
Borrowing
Access Policy and Limits on Use of IMF Resources
Members’ Use of IMF Resources and Credit Outstanding
Stand-By and Extended Arrangements
Special Facilities
SAF and ESAF
ESAF-HIPC Trust
IMF Income, Charges, and Burden Sharing
Overdue Financial Obligations
Progress Under the Strengthened Cooperative Strategy
SDR Department
SDR Valuation and Interest Rate Basket
SDR Operations and Transactions
Pattern of SDR Holdings
IV. IMF Organization, Staffing, and Budget
11. Organization, Staffing, and Budget
Executive Board
Departments
Area Departments
Functional and Special Services Departments
Information and Liaison
Support Service
Staff
Recruitment and Retention
Salary Structure
Diversity
Administrative and Capital Budgets
Budget Outlook
Budgets and Expenditure in 1998/99
Budgets and Expenditure in 1999/2000
Appendices
I. International Reserves
II. Financial Operations and Transactions
III. Principal Policy Decisions of the Executive Board
IV. IMF Relations with Other International Organizations
V. External Relations
VI. Press Communiqués of the Interim Committee and the Development Committee
VII. Excutive Directors and Voting Power on April 30, 1999
VIII. Changes in Membership of the Executive Board
IX. Financial Statements
Boxes
Board of Governors, Executive Board, Interim Committee, and Development Committee
1. Asian Crisis Countries: Developments and IMF Response Through the End of April 1999
2. Strengthening the SDDS and Improving Access to Debt Data
3. Enhanced IMF-World Bank Financial Sector Collaboration
4. Measures for Involving the Private Sector in Resolving Crises
5. To Tighten Defenses Against Contagion, IMF Establishes Contingent Credit Lines
6. External Evaluation of IMF Surveillance
7. The Stability and Growth Pact
8. IMF Grants Observer Status to European Central Bank
9. Conference on the Transition Experience
10. IMF Financial Facilities and Policies
11. Conference on Economic Policy and Equity
12. IMF’s Response to Hurricane Mitch
13. IMF Institute and Regional Institutions
14. IMF Publishes Information on Its Financial and Liquidity Position and on Members’ Accounts
15. Operational Budget
16. Operational Implications of the Euro
17. Designation Plan
18. IMF Resident Representatives
19. IMF Internal Evaluations
Tables
1. Overview of the World Economy
2. Emerging Market Economies: Net Capital Flows
3. Key Economic Indicators: Indonesia, Korea, and Thailand, 1990-99
4. Article IV Consultations Concluded in 1998/99
5. HIPC Initiative: Status of Country Cases, as of End-April 1999
6. Technical Assistance Delivery
7. General Arrangements to Borrow (GAB)
8. New Arrangements to Borrow (NAB)
9. Access Limits, April 1999
10. Selected Financial Indicators
11. Use of IMF Resources in 1998/99: Regional Distribution
12. Arrears to the IMF of Countries with Obligations Overdue by Six Months or More
13. Arrears to the IMF of Countries with Obligations Overdue by Six Months or More, by Type and Duration, as of April 30, 1999
14. Change in SDR Valuation Basket
15. Transfers of SDRs
16. Nationality Distribution of Professional Staff by Region
17. Gender Distribution of Staff by Level
18. Estimated Costs of Major IMF Activities, Financial Years 1998-2000
19. Administrative and Capital Budgets, Financial Years 1997-2000
Figures
1. World Indicators
2. Developing Countries: Real GDP Growth
3. Initiative for Heavily Indebted Poor Countries
4. Composition of Technical Assistance, 1998/99
5. IMF’s Liquidity Ratio, 1984-99
6. General Resources Purchases and Repurchases, Financial Years Ended April 30, 1982-99
7. Total IMF Credit Outstanding to Members, Financial Years Ended April 30, 1984-99
8. International Monetary Fund: Chart of Organization
9. Estimated Cost of Major Activities, Financial Year 1999
Prefatory Notes
This Annual Report of the Executive Board of the IMF reports on the activities of the Board during the financial year May 1, 1998, through April 30, 1999. Most of the Report consists of reviews of Board discussions of the whole range of IMF policy and operations. The discussions are based on papers prepared by the staff. Typically, a staff paper includes background factual and analytical material on various aspects of the issue at hand. It may also present proposals by the IMF’s management on how the Board and the institution should move forward on an issue. Although a staff paper presents the positions of staff and management, it does not necessarily represent the IMF’s position on the issue. The Board may or may not agree with the analysis or the proposals. The position of the IMF is, rather, the position of the Board as reflected in a decision or as explained in a statement summarizing the discussion (usually referred to in the IMF as the “summing up”).
The unit of account of the IMF is the SDR; conversions of IMF financial data to U.S. dollars are approximate and are provided for convenience. As of April 30, 1999, the SDR/U.S. dollar exchange rate was US$1 = SDR 0.740066, and the U.S. dollar/SDR exchange rate was SDR 1 = US$1.35123. The year-earlier rates (April 30, 1998) were US$1 = SDR 0.742580 and SDR 1 = US$1.34666.
As used in this Report, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.
The following conventions are used in this Report:
… to indicate that data are not available;
— to indicate that the figure is less than half the final digit shown or that the item does not exist;
– between years or months (e.g., 1998-99 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years or months (e.g., 1998/99) to indicate a fiscal or financial year.
“Billion” means a thousand million; “trillion” means a thousand billion.
Minor discrepancies between constituent figures and totals are due to rounding.