The International Monetary Fund
The IMF is the world’s central organization for international monetary cooperation. With 188 member countries, it is an organization in which almost all of the countries in the world work together to promote the common good. The IMF’s primary purpose is to safeguard the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to buy goods and services from one another. This is essential for achieving sustainable economic growth and raising living standards.
All of the IMF’s member countries are represented on its Executive Board, which discusses the national, regional, and global consequences of each member’s economic policies. This Annual Report covers the activities of the Executive Board and IMF management and staff during the financial year May 1, 2013, through April 30, 2014. The contents reflect the views and policies of the IMF Executive Board, which has actively participated in its preparation.
The main activities of the IMF include
• providing advice to members on adopting policies that can help them prevent or resolve a financial crisis, achieve macroeconomic stability, accelerate economic growth, and alleviate poverty;
• making financing temporarily available to member countries to help them address balance of payments problems, that is, when they find themselves short of foreign exchange because their payments to other countries exceed their foreign exchange earnings; and
• offering technical assistance and training to countries, at their request, to help them build the expertise and institutions they need to implement sound economic policies.
The IMF is headquartered in Washington, D.C., and, reflecting its global reach and close ties with its members, also has offices around the world.
Additional information on the IMF and its member countries can be found on the Fund’s website, www.imf.org.
Ancillary materials for the Annual Report—Web Boxes, Web Tables, Appendixes (including the IMF’s financial statements for the financial year ended April 30, 2014), and other pertinent documents—can be accessed via the Annual Report web page at www.imf.org/external/pubs/ft/ar/2014/eng. A CD-ROM version of the Annual Report, including the ancillary materials posted on the web page, is also available from IMF Publication Services.
©2014 International Monetary Fund
Annual Report 2014—From Stabilization to Sustainable Growth
ISBN 978-1-49831-535-7 (paper)
ISBN 978-1-49834-694-8 (PDF)
Note: The analysis and policy considerations expressed in this publication are those of the IMF Executive Directors.
Publication orders may be placed online, by fax, or through the mail:
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P.O. Box 92780, Washington, DC 20090, U.S.A.
Tel.: (202) 623-7430 Fax: (202) 623-7201
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Cover top Researchers in Shanghai, China, experiment on a vaccine Bottom Vocational school students in Kabgayi, Rwanda, inspect a motor
Acronyms and Abbreviations
| ACT |
Arab countries in transition |
| AML/CFT |
Anti–Money Laundering and Combating the Financing of Terrorism |
| ASEAN+3 |
Association of Southeast Asian Nations plus China, Japan, and Korea |
| CDIS |
Coordinated Direct Investment Survey |
| CESEE |
central, eastern, and southeastern Europe |
| CPIS |
Coordinated Portfolio Investment Survey |
| COFER |
Currency Composition of Foreign Exchange Reserves |
| CPI-GBA |
Consumer Price Index for Greater Buenos Aires |
| DGI |
Data Gaps Initiative |
| DSA |
debt sustainability analysis |
| DSF |
Debt Sustainability Framework for Low-Income Countries |
| EAC |
External Audit Committee |
| EC |
European Commission |
| ECB |
European Central Bank |
| ENDA |
Emergency Natural Disaster Assistance |
| EPCA |
Emergency Post-Conflict Assistance |
| EFF |
Extended Financing Facility |
| EWE |
Early Warning Exercise |
| FAS |
Financial Access Survey |
| FATF |
Financial Action Task Force |
| FCL |
Flexible Credit Line |
| FM |
Fiscal Monitor |
| FSAP |
Financial Sector Assessment Program |
| FSB |
Financial Stability Board |
| FSRB |
FATF-style regional body |
| FY |
financial year |
| GAB |
General Arrangements to Borrow |
| G20 |
Group of Twenty |
| GDDS |
General Data Dissemination System |
| GDP |
gross domestic product |
| GFSR |
Global Financial Stability Report |
| GRA |
General Resources Account |
| HIPC |
Heavily Indebted Poor Countries |
| ICD |
Institute for Capacity Development |
| IEO |
Independent Evaluation Office |
| IFRS |
International Financial Reporting Standards |
| IMFC |
International Monetary and Financial Committee |
| MAP |
Mutual Assessment Process |
| MDRI |
Multilateral Debt Relief Initiative |
| NAB |
New Arrangements to Borrow |
| OECD |
Organisation for Economic Co-operation and Development |
| OIA |
Office of Internal Audit and Inspection |
| PIN |
Public Information Notice |
| PLL |
Precautionary and Liquidity Line |
| PR |
Press Release |
| PRGT |
Poverty Reduction and Growth Trust |
| PSI |
Policy Support Instrument |
| RCF |
Rapid Credit Facility |
| REO |
Regional Economic Outlook |
| RFI |
Rapid Financing Instrument |
| ROSC |
Report on the Observance of Standards and Codes |
| RTAC |
Regional Technical Assistance Center |
| SBA |
Stand-By Arrangement |
| SDDS |
Special Data Dissemination Standard |
| SDR |
special drawing right |
| TSR |
Triennial Surveillance Review |
| UMP |
unconventional monetary policy |
| WEO |
World Economic Outlook |
IMF
INTERNATIONAL MONETARY FUND
ANNUAL REPORT 2014
FROM STABILIZATION TO SUSTAINABLE GROWTH
Contents
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MESSAGE FROM THE MANAGING DIRECTOR AND CHAIR OF THE EXECUTIVE BOARD
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EXECUTIVE BOARD
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LETTER OF TRANSMITTAL TO THE BOARD OF GOVERNORS
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1 | OVERVIEW
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The Global Economy
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Surveillance and Fund-Supported Programs
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Policy Advice, Governance, and Capacity Building
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Resources and Accountability
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2 | DEVELOPMENTS IN THE GLOBAL ECONOMY AND FINANCIAL MARKETS
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Introduction
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The Global Economy: Shifting Growth Contributions
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Toward a Dynamic, Job-Rich Recovery
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3 | MANAGING MULTIPLE TRANSITIONS
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Policies for an Interconnected World
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Monitoring global developments
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Surveillance
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Low-income countries
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Emerging markets
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Arab countries in transition
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Small states
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Financing and the Global Safety Net
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Financing resources
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Program design
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Conditionality
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Financing during the year
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4 | SUPPORTING A SUSTAINABLE RECOVERY AND RESTORING RESILIENCE
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Policy Advice
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Fiscal policy
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Fiscal sustainability
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Monetary policy
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Macroprudential policy
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Regulatory reform
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Jobs and growth
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Reserve adequacy
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Quotas and Governance
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Review of quotas
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Quota formula
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Capacity Development
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Technical assistance initiatives
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Responding to urgent needs
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Helping member countries to develop capacity
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Training
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External support
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Data and Data Standards Initiatives
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General Data Dissemination System, Special Data Dissemination Standard, and Special Data Dissemination Standard Plus
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Argentina’s consumer price index and GDP data
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Other data and statistics activities
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Engagement With Other Organizations
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Group of Twenty
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Financial Stability Board
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World Bank Group
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Other organizations
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5 | FINANCES, ORGANIZATION, AND ACCOUNTABILITY
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Budget and Income
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Income, charges, remuneration, and burden sharing
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Gold sales
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Administrative and capital budgets
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Arrears to the IMF
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Audit mechanisms
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Risk management
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Human Resources Policies and Organization
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Human resources
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Extension of term of IMFC Chair
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Accountability
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Independent Evaluation Office
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Transparency
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Review of communications strategy
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Outreach and engagement with external stakeholders
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EXECUTIVE DIRECTORS AND ALTERNATES
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SENIOR OFFICERS
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IMF ORGANIZATION CHART
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NOTES
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BOXES
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3.1. How women help economic growth
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4.1. Update of the Code on Good Practices in Fiscal Transparency Initiative
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4.2. New standardized assessment tools
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4.3. New ICD courses
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4.4. First statistical forum spotlights role of statistics for global economic and financial stability
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5.1. Building renovation progresses
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5.2. Safeguards assessments: Policy and activity
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5.3. In Memoriam: Wabel Abdallah
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5.4. Regional Office for Asia and the Pacific initiatives to strengthen policy dialogue
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FIGURES
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3.1. Arrangements approved during financial years ended April 30, 2005–14
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3.2. Nonconcessional financing outstanding, FY2005–14
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3.3. Concessional financing outstanding, FY2005–14
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4.1. Technical assistance delivery by income group, FY2011–14 outturn
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4.2. Technical assistance delivery by topic, FY2011–14 outturn
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4.3. Technical assistance delivery by program status, FY2011–14 outturn
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4.4. Technical assistance delivery by region, FY2011–14 outturn
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4.5. Training delivery by income group, FY2011–14
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4.6. Training delivery by course group, FY2011–14
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4.7. Training delivery by region, FY2011–14
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4.8. Capacity development spending, FY2011–14
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TABLES
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3.1. IMF financing facilities
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3.2. Arrangements in the General Resources Account approved in FY2014
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3.3. Arrangements approved and augmented under the Poverty Reduction and Growth Trust in FY2014
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5.1. Budget by major expenditure category, FY2013–17
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5.2. Administrative expenses reported in the financial statements, FY2014
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5.3. Arrears to the IMF of countries with obligations overdue by six months or more and by type, as of April 30, 2014
The IMF’s financial year is May 1 through April 30.
The unit of account of the IMF is the SDR (special drawing right); conversions of IMF financial data to U.S. dollars are approximate and provided for convenience. On April 30, 2014, the SDR/U.S. dollar exchange rate was US$1 = SDR 0.64529, and the U.S. dollar/SDR exchange rate was SDR 1 = US$ $1.54969. The year-earlier rates (April 30, 2013) were US$1 = SDR 0.662691 and SDR 1 = US$1.509.
“Billion” means a thousand million; “trillion” means a thousand billion; minor discrepancies between constituent figures and totals are due to rounding.
As used in this Annual 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.
Message from the Managing Director and Chair of the Executive Board
The year 2014 marks the 70th anniversary of the founding of the IMF. Back in 1944, global leaders were determined to put the chaos and carnage of war behind them, and build a world based on collaboration instead of conflict, integration instead of insularity. The IMF was founded on the core principle that the route to national prosperity runs through global prosperity.
This year also marks the seventh anniversary of the onset of the global financial crisis, which turned into the worst global economic dislocation since the Great Depression. Even so, we did not witness a second Great Depression. This was no accident; rather, it was due to the sound application of the founding principle of the IMF: putting global collaboration first. I am proud of the IMF’s role as part of that global response.
Yet there is still a long way to go to secure a sustainable recovery, marked by strong and inclusive growth and rapid job creation. The recovery is ongoing, but it is still too slow and fragile, subject to the vagaries of financial sentiment. Millions of people are still looking for work. The level of uncertainty might be diminishing, but it is certainly not disappearing.
A daunting issue is that changing growth dynamics are complicating the global recovery. Since the recovery is uneven across advanced economies—faster in the United States and the United Kingdom than in the euro area or Japan—the normalization of monetary policy will proceed at different paces in different countries, with potential implications for volatility and growth. At the same time, emerging markets are experiencing a broad-based and synchronized slowdown in growth, which can in turn hurt prospects elsewhere in the world. The risk of very low inflation in Europe is also casting a shadow over the recovery. Rising geopolitical concerns are adding to overall uncertainty.
The situation needs to be managed through the right combination of policies. In this context, the IMF laid out its Global Policy Agenda at both the Annual Meetings in 2013 and the Spring Meetings in 2014. This agenda emphasized the need to strengthen the coherence of policies and cooperation among policymakers. The priorities are clear: advanced economies need to focus on measured and well-communicated policy choices to secure the recovery; emerging markets need to strengthen their fundamentals, reduce their vulnerabilities, and step up structural reforms; and everyone needs to embrace cooperation and engage in dialogue.
Throughout the crisis and in the recovery period, the IMF has been, and continues to be, an indispensible agent of economic cooperation. It is a principal forum for our 188 member countries to come together and work together. Over the past year, the IMF has continued to support its members—through its surveillance, its lending, and its technical assistance.
The Fund has made it a priority to better integrate bilateral and multilateral surveillance, especially through its Spillover and External Sector Reports, as well as cluster reports. It has helped countries in such areas as fiscal policy in advanced economies; growth strategies and structural reforms in emerging markets; and vulnerabilities, diversification, and structural transformation in low-income countries. It has stepped up work in newer areas with implications for stability and growth—including inequality, the environment, and the economic participation of women.
On the financial front, the Fund continued to support members’ reform efforts all across the globe, to help ease the pain of adjustment. This year, the Fund reviewed facilities such as the Flexible Credit Line, the Precautionary and Liquidity Line, and the Rapid Financing Instrument—to make sure that they continue to help countries as effectively as possible. The membership also agreed to transfer gold profits to help us meet the financing needs of our low-income members in the years ahead.
The IMF has also stepped up its efforts in capacity development—helping countries design, build, and strengthen the institutions that make up the building blocks of economic success. Since the crisis broke, we have provided training to all of our members and technical assistance to 90 percent of them. Over the past year, the IMF launched new tools and courses, opened a new regional technical assistance center in Ghana, and received $181 million in new donor funds.
Overall, I am extremely proud of the IMF’s accomplishments over the past year, and of the people who made it happen—our dedicated staff and Executive Board. It is a great privilege to serve as Managing Director of this noble institution. I look forward to continuing to adapt to meet the challenges of our entire membership so that the global economy can enjoy a new phase of sustained growth and shared prosperity.
The Annual Report of the IMF’s Executive Board to the Fund’s Board of Governors is an essential instrument in the IMF’s accountability. The Executive Board is responsible for conducting the Fund’s business and consists of 24 Executive Directors appointed by the IMF’s 188 member countries, while the Board of Governors, on which every member country is represented by a senior official, is the highest authority governing the IMF. The publication of the Annual Report represents the accountability of the Executive Board to the Fund’s Board of Governors.
Executive Board as of April 30, 2014
Alternate Executive Directors are indicated in italics.
Letter of Transmittal to the Board of Governors
July 30, 2014
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, 2014, 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, 2015, are presented in Chapter 5. The audited financial statements for the year ended April 30, 2014, of the General Department, the SDR Department, and the accounts administered by the IMF, together with reports of the external audit firm thereon, are presented in Appendix VI, which appears on the CD-ROM version of the Report, as well as at www.imf.org/external/pubs/ft/ar/2014/eng/index.htm. The external audit and financial reporting processes were overseen by the External Audit Committee, comprising Mr. Wang (Chair), Mr. Ramos, and Mr. Loeto, as required under Section 20(c) of the Fund’s By-Laws.
Yours very truly,
Christine Lagarde
Managing Director and Chair of the Executive Board