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Appendix VI. Press Communiqués of the Interim Committee and the Development Committee

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International Monetary Fund
Published Date:
October 1997
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Interim Committee of the Board of Governors on the International Monetary System

PRESS COMMUNIQUÉS

Forty-Seventh Meeting, Washington, D.C., September 29, 1996

1. The Interim Committee held its forty-seventh meeting in Washington, D.C. on September 29, 1996 under the Chairmanship of Mr. Philippe Maystadt, Deputy Prime Minister and Minister of Finance and of Foreign Trade of Belgium.

2. The Committee welcomed the generally encouraging world economic and financial situation and prospects for a strengthening and broadening of the economic expansion in 1996 and 1997. It noted the progress toward price stability and in reducing fiscal deficits in many countries, the improvement in exchange market conditions among the major currencies, the continuing rapid expansion of trade and financial flows, and the growing reliance on market forces worldwide. The Committee observed that:

• Developing countries are playing an increasingly significant role in generating growth and expanding trade, with many emerging market economies reaping the benefits of consistent implementation of market-oriented policies, supported by capital inflows including sustained foreign direct investment. The performance of many Asian countries remains impressive: in a number of cases, moderating growth is helping to alleviate inflationary pressures. In an increasing number of African countries, per capita incomes and growth prospects are improving as a result of sound policies, although serious problems remain. Many Latin American countries are recovering and experiencing lower inflation, after the difficulties associated with the Mexican crisis. In the Middle East, strengthened adjustment efforts have enhanced growth prospects in several countries.

• In the transition countries, continued implementation of broad-based reforms is expected to lead to a further strengthening of growth performance, and inflation, though still high, is declining.

• In the industrial countries, inflation is subdued: sound expansion of output and employment has continued in the United States and some other countries; Japan’s recovery is more firmly established; and in continental western Europe, the standstill in growth has ended and conditions are now in place for a resumption of more satisfactory growth.

3. The Committee noted that favorable developments in the world economy reflect the implementation by many countries of policies consistent with the common strategy set out in the October 1994 Madrid Declaration on Cooperation to Strengthen the Global Expansion. It noted that this strategy remained valid. It saw however a need to update and broaden it to take account of new challenges in the changing global environment, in the attached Declaration on Partnership for Sustainable Global Growth on September 29, 1996.

4. The Committee welcomed the strengthening of Fund surveillance and the report of the Managing Director on the review of policies in the context of surveillance, which provides valuable lessons for the membership and for the Fund on the conduct of surveillance in the new global environment.

5. The Committee welcomed the Special Data Dissemination Standard and was encouraged by the broad mix of industrial and emerging market countries among its first subscribers; it urged other countries that are in a position to subscribe to do so. It noted the recent initiation of the Data Standards Bulletin Board (DSBB). It looks forward to further enhancement of the DSBB, including the possible establishment of electronic links to country data. It requested the Executive Board to complete work on the general standards for data dissemination, that will apply to all countries, so that they are in place before the Spring 1997 meeting of the Committee.

6. With respect to the Fund’s financial resources and assistance to members, the Committee:

• Welcomed the progress made by the Executive Board in its work on the Eleventh General Review of Quotas. In view of the evolution of the Fund’s prospective liquidity position, and other factors, the Committee requested the Executive Board to continue its work on the Review and to do its utmost to reach a conclusion as soon as possible.

• Welcomed the progress made in establishing the New Arrangements to Borrow. It noted that these Arrangements would effectively double the resources currently available to the Fund under the General Arrangements to Borrow and improve the Fund’s ability to meet requests for balance of payments assistance by members in circumstances that could have systemic implications. It requested the participants in the new Arrangements, and the Executive Board, to complete their work promptly. The Committee urged the participating members to complete the domestic processes needed to bring these new Arrangements into effect as soon as possible.

7. The Committee warmly endorsed the program of action proposed by the Fund and the Bank to ensure that the heavily indebted poor countries (HIPCs) that have shown a sound track record of economic adjustment can attain a sustainable debt situation over the medium term. It endorsed the conclusions by the Executive Board on financing the continuation of ESAF and the Fund’s participation in the Initiative to assist the HIPCs, to which all members are committed. It also welcomed the agreement to transfer a portion of the ESAF reserves to support the Fund’s participation in the HIPC Initiative with grants or loans on longer maturities. The Committee also welcomed the commitment by the World Bank to the Initiative and the President’s willingness to allocate an overall contribution to it. It welcomed the indication that the Paris Club creditors are ready to go beyond Naples terms in providing debt reduction of up to 80 percent for countries qualifying for additional relief within the HIPC Initiative, on a case-by-case basis according to its usual rules, to achieve an exit from an unsustainable debt. It urged other creditors to participate in the Initiative on an equitable basis. It also reaffirmed the importance of the Fund’s preferred creditor status. The Committee requested the Executive Board to proceed quickly with implementation and to report on progress to the Committee in Spring 1997.

8. The Committee welcomed the consensus reached in the Executive Board that all members should receive an equitable share of cumulative SDR allocations through an amendment of the Fund’s Articles of Agreement providing for a onetime allocation of SDRs, based on a common benchmark ratio of cumulative allocations to present quotas. The Committee endorsed this approach and requested the Executive Board to finalize its work on the amendment by the time of the Committee’s next meeting. The Committee emphasized that such an amendment of the Articles would not in any way affect the Fund’s existing power to allocate SDRs on the basis of a finding of long-term global need to supplement reserves as and when that need arises.

9. The Committee asked the Executive Board to continue its analysis of capital flows and their implications, to examine possible changes in the Fund Articles, and to report to the Committee at our next meeting.

10. The Committee will meet again in Washington on April 28, 1997.

September 29, 1996 Interim Committee Declaration on Partnership for Sustainable Global Growth

The Interim Committee has reviewed the Declaration on Cooperation to Strengthen the Global Expansion, which it adopted two years ago in Madrid. It notes that the strategy set out in the Declaration, which emphasized sound domestic policies, international cooperation, and global integration, remains valid. It reiterates the objective of promoting full participation of all economies, including the low-income countries, in the global economy. Favorable developments in, and prospects for, many industrial, developing, and transition economies owe much to the implementation of sound policies consistent with the common medium-term strategy.

The Interim Committee sees a need to update and broaden the Declaration, in light of the new challenges of a changing global environment, and to strengthen its implementation, in a renewed spirit of partnership. It attaches particular importance to the following:

• Stressing that sound monetary, fiscal, and structural policies are complementary and mutually reinforcing: steady application of consistent policies over the medium term is required to establish the conditions for sustained noninflationary growth and job creation, which are essential for social cohesion.

• Implementing sound macroeconomic policies and avoiding large imbalances are essential to promote financial and exchange rate stability and avoid significant misalignments among currencies.

• Creating a favorable environment for private savings.

• Consolidating the success in bringing inflation down and building on the hard-won credibility of monetary policy.

• Maintaining the impetus of trade liberalization, resisting protectionist pressures, and upholding the multilateral trading system.

• Encouraging current account convertibility and careful progress toward increased freedom of capital movements through efforts to promote stability and financial soundness.

• Achieving budget balance and strengthened fiscal discipline in a multi-year framework. Continued fiscal imbalances and excessive public indebtedness, and the upward pressures they put on global real interest rates, are threats to financial stability and durable growth. It is essential to enhance the transparency of fiscal policy by persevering with efforts to reduce off-budget transactions and quasi-fiscal deficits.

• Improving the quality and composition of fiscal adjustment, by reducting unproductive spending while ensuring adequate basic investment in infrastructure. Because the sustainability of economic growth depends on development of human resources, it is essential to improve education and training; to reform public pension and health systems to ensure their long-term viability and enable the provision of effective health care; and to alleviate poverty and provide well-targeted and affordable social safety nets.

• Tackling structural reforms more boldly, including through labor and product market reforms, with a view to increasing employment and reducing other distortions that impede the efficient allocation of resources, so as to make our economies more dynamic and resilient to adverse developments.

• Promoting good governance in all its aspects, including by ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption, as essential elements of a framework within which economies can prosper.

• Ensuring the soundness of banking systems through strong prudential regulation and supervision, improved coordination, better assessment of credit risk, stringent capital requirements, timely disclosure of banks’ financial conditions, action to prevent money laundering, and improved management of banks.

The Committee encourages the Fund to continue to cooperate with other international organizations in all relevant areas. It welcomes the recent strengthening of Fund surveillance of member countries’ policies, which is an integral part of the strategy. It reaffirmed its commitment to strengthen the Fund’s capacity to fulfill its mandate. It will keep members’ efforts at achieving the common objectives of this strategy under review.

Annex: Interim Committee Attendance September 29, 1996

Chairman

Philippe Maystadt, Minister of Finance, Belgium

Managing Director

Michel Camdessus

Members or Alternates

Ibrahim A. Al-Assaf, Minister of Finance and National Economy, Saudi Arabia

Sultan N. Al-Suwaidi, Governor, United Arab Emirates Central Bank (Alternate for Ahmed Humaid Al-Tayer, Minister of State for Financial and Industrial Affairs, United Arab Emirates)

Jean Arthuis, Minister of Economy and Finance, France

Erik Åsbrink, Minister of Finance, Sweden

Antonio Casas González, President, Banco Central de Venezuela

P. Chidambaram, Minister of Finance, India

M.A.P. Chikaonda, Governor, Reserve Bank of Malawi

Carlo A. Ciampi, Minister of the Treasury, Italy

Kenneth Clarke, Chancellor of the Exchequer, United Kingdom

Peter Costello, Treasurer, Australia

Dai Xianglong, Governor, People’s Bank of China

J. Soedradjad Djiwandono, Governor, Bank Indonesia

Marcel Doupamby Matoka, Minister of Finance, Economy, Budget, and Equity Financing, Gabon

Sergei Dubinin, Chairman, Central Bank of the Russian Federation

Roque B. Fernández, Minister of Economy and Public Works and Services, Argentina

Abdelouahab Keramane, Governor, Banque d’Algérie

Wataru Kubo, Minister of Finance, Japan

Pedro Sampaio Malan, Minister of Finance, Brazil

Paul Martin, Minister of Finance, Canada

Viktor Klima, Federal Minister of Finance, Austria (Alternate for Philippe Maystadt, Minister of Finance, Belgium)

Robert E. Rubin, Secretary of the Treasury, United States

Kaspar Villiger, Minister of Finance, Switzerland

Theo Waigel, Federal Minister of Finance, Germany

Gerrit Zalm, Minister of Finance, Netherlands

Observers

Y. Akyuz, Chief, Macroeconomic Unit, Global Interdependence Division, UNCTAD

Andrew D. Crockett, General Manager, BIS

Yves-Thibault de Silguy, Commissioner for Economic, Monetary and Financial Affairs, EC

Donald J. Johnston, Secretary-General, OECD

Mohamed Kabbaj, Chairman, Joint Development Committee

Jean-Claude Milleron, Under-Secretary-General for Economic and Social Information and Policy Analysis, UN

Renato Ruggiero, Director-General, WTO

James D. Wolfensohn, President, World Bank

Forty-Eighth Meeting, Washington, D.C., April 28, 1997

1. The Interim Committee held its forty-eighth meeting in Washington, D.C. on April 28, 1997 under the Chairmanship of Mr, Philippe Maystadt, Deputy Prime Minister and Minister of Finance and Foreign Trade of Belgium.

2. The Committee welcomed the generally favorable prospects for the expansion of world output and trade. Improved discipline in fiscal and monetary policies in many countries has contributed to subdued or declining inflation and relatively low long-term interest rates. Substantial misalignments among major currency exchange rates have been corrected. The Committee agreed that exchange rates should reflect economic fundamentals and that the reemergence of large external imbalances should be avoided; excess volatility and significant deviations from fundamentals are undesirable. The Committee recognized the importance of cooperation in exchange markets as appropriate. Widespread structural reforms are enhancing the role of market forces and deepening globalization through trade and financial flows. Yet, policy challenges remain:

• Among the advanced economies, countries where growth has been relatively strong face the challenge of sustaining the expansion while preventing an upturn in inflation, and policies should continue to be directed toward these objectives. In Japan, prospects for continued recovery appear more favorable; rigorous implementation of the authorities’ deregulation program as well as appropriate fiscal reforms are important over the medium term, to enhance growth. In continental Europe, the outlook for growth has improved, but high structural unemployment points to the urgency of tackling labor market rigidities. The Committee also agreed that continued efforts to meet the convergence criteria and to proceed with comprehensive structural reforms in factor and product markets are needed for both the longer-term prosperity of the participating countries and to ensure a successful EMU that would contribute to the stability of the international monetary system.

• Robust growth is continuing in many developing countries. Growth in the Asian economies has remained strong for several years. The recent abatement of overheating pressures in many of the emerging market economies, especially in Asia, will help to sustain their expansions, although some large current account deficits need to be reduced. With the sustained implementation of sound policies, growth in the Western Hemisphere and in the Middle East region is expected to strengthen further. The Committee was particularly heartened by the improved growth performance and prospects in Africa. It emphasized, however, that many developing countries have to raise substantially their growth rates of per capita incomes to achieve a significant reduction of poverty, indicating the need to accelerate structural reforms and for the increased support of the international community.

• In the transition countries, further progress in the control of inflation and continued advances in structural reform are laying the ground for stronger growth. However, sharp contrasts in performance persist among these countries, highlighting the benefits of steadfast commitment to stabilization and structural reforms.

3. The Committee agreed that the increasing globalization of markets is an important force driving world growth and providing opportunities to all countries. While globalization, as with other structural change, may adversely affect some segments of society in the short run, the declining share of manufacturing employment—deindustrialization—in advanced economies is primarily the consequence of technological change rather than globalization. The challenge for policies is to take advantage of the forces of globalization so as to ensure that its benefits are fully realized. The Committee reaffirmed that implementation by all members of the guidelines set out in its Declaration on Partnership for Sustainable Global Growth would be essential to ensure that all share in an increasingly prosperous world economy. It stressed in particular the importance of sound macroeconomic policies, market-oriented reforms, sound banking systems, trade and investment liberalization, and good governance.

4. The Committee welcomed the strengthening of Fund surveillance to meet the new challenges of globalization. It supported the Fund’s increasing attention to banking and financial sector problems that could have significant macroeconomic implications. In this context, it emphasized the importance of close collaboration with the World Bank and other international organizations and groups. The Committee welcomed the Board’s decision allowing the release, on a voluntary basis, of Press Information Notices following the conclusion of Article IV consultations, which would further improve the transparency of surveillance. It looked forward to a further report on members’ policies in the context of surveillance at its next meeting.

5. The Committee was encouraged by the large number of subscriptions—presently numbering 42—to the Special Data Dissemination Standard. It noted the progress achieved on the General Data Dissemination System, and welcomed the General System’s emphasis on improving data quality across the membership, which would require a broad cooperative effort of the Fund and its members. The Committee looked forward to the establishment of the General System.

6. The Committee welcomed the progress made toward establishing conditions for EMU, the creation of which is one of the most important international monetary developments in the post–Bretton Woods period. The Executive Board will undertake a broad program to assess the implications of EMU for the international monetary system and for the Fund.

7. The Committee emphasized that an open and liberal system of capital movements was beneficial to the world economy. It considered the Fund uniquely placed to promote the orderly liberalization of capital movements and to play a central role in this effort. It, therefore, agreed that the Fund’s Articles should be amended to make the promotion of capital account liberalization a specific purpose of the Fund and to give the Fund appropriate jurisdiction over capital movements; the scope of such jurisdiction would need to be carefully defined, and sufficient flexibility should be allowed through transitional provisions and approval policies. The Committee asked the Executive Board to continue its work in this area with a view to making specific recommendations on key elements of an amendment by the time of the Committee’s next meeting.

8. The Committee commended the Executive Board for its work on the Eleventh General Review of Quotas, It requested the Executive Board to complete its work on quotas as soon as possible and to report to it in time for the Hong Kong meeting of the Committee. The proposed distribution should be predominantly equiproportional while contributing to a correction of the most important anomalies in the present quota distribution. The Executive Board should also review the quota formulae promptly after the completion of the Eleventh Review of Quotas.

9. The Committee welcomed the adoption of the Executive Board decision on New Arrangements to Borrow (NAB) and encouraged potential participants that have not yet adhered to the decision to do so as soon as feasible.

10. The Committee welcomed the progress achieved in the Executive Board toward a proposed amendment of the Articles of Agreement to provide for a special one-time allocation of SDRs and requested the Executive Board to finalize its work as soon as possible and to report to the Committee in time for the Hong Kong meeting.

11. The Committee welcomed the actions taken by the Executive Board to implement the Fund’s participation in the HIPC Initiative through special ESAF operations. It noted with satisfaction the Board’s decision in principle to provide assistance to Uganda under the HIPC Initiative and encouraged all other creditors to take equivalent action as soon as possible. It also welcomed the preliminary consideration by the Board of three other country cases under the Initiative and encouraged the Board to implement the Initiative in a manner that would ensure a robust exit from the rescheduling process. It stressed the importance of the provision of adequate interim financing by all creditors. The Committee noted the importance of strong adjustment and reform policies, as well as social policies, on the part of the countries benefiting from assistance under this Initiative, It called on the Fund, in collaboration with the World Bank, to help these and other developing countries accelerate the process of structural reform. The Committee urged all members to work expeditiously to help secure the resources needed to complete the funding of the Fund’s participation in the HIPC Initiative as well as the continuation of ESAF.

12. The Committee will meet again in Hong Kong on September 21, 1997.

Annex: Interim Committee Attendance April 28, 1997

Chairman

Philippe Maystadt, Deputy Prime Minister and Minister of Finance and Foreign Trade of Belgium

Managing Director

Michel Camdessus

Members or Alternates

Ahmad Mohd Don, Governor, Bank Negara Malaysia

Ibrahim A. Al-Assaf, Minister of Finance and National Economy, Saudi Arabia

Jean Arthuis, Minister of Economy and Finance, France

Erik Åsbrink, Minister of Finance, Sweden

Aleke K. Banda, Minister of Finance, Malawi

Carlo A. Ciampi, Minister of the Treasury, Italy

E.A.J. George, Governor, Bank of England (Alternate for Kenneth Clarke, Chancellor of the Exchequer, United Kingdom)

Rod Kemp, Assistant Treasurer, Australia (Alternate for Peter Costello, Treasurer, Australia)

Chen Yuan, Deputy Governor, People’s Bank of China (Alternate for Dai Xianglong, Governor, People’s Bank of China)

Rodrigo de Rato Figaredo, Second-Vice President and Minister of Economy and Finance, Spain

Marcel Doupamby Matoka, Minister of Finance, Economy, Budget, and Equity Financing, Gabon

Sergei Dubinin, Chairman, Central Bank of the Russian Federation

Pablo Guidotti, Secretary of Finance, Argentina (Alternate for Roque B. Fernández, Minister of Economy and Public Works and Services, Argentina)

Abdelouahab Keramane, Governor, Banque d’Algérie

Sultan N, Al-Suwaidi, Governor, United Arab Emirates Central Bank (Alternate for Mohamed Khalfan Bin Khar-bash, Minister of State for Financial and Industrial Affairs, United Arab Emirates)

Pedro Sampaio Malan, Minister of Finance, Brazil

James A. Judd, Assistant Deputy Minister, Department of Finance, Canada (Alternate for Paul Martin, Minister of Finance, Canada)

Wolfgang Ruttenstorfer, Deputy Minister of Finance, Austria (Alternate for Philippe Maystadt, Minister of Finance, Belgium)

Hiroshi Mitsuzuka, Minister of Finance, Japan

C. Rangarajan, Governor, Reserve Bank of India

Robert E. Rubin, Secretary of the Treasury, United States

Kaspar Villiger, Minister of Finance, Switzerland

Theo Waigel, Federal Minister of Finance, Germany

Gerrit Zalm, Minister of Finance, Netherlands

Observers

A. Cornford, Senior Economic Affairs Officer for Banking and Financial Markets, Division on Globalization and Development Strategies, UNCTAD

Andrew D. Crockett, General Manager, BIS

Nitin Desai, Under-Secretary-General for Policy Coordination and Sustainable Development, UN

Yves-Thibault de Silguy, Commissioner for Economic, Monetary and Financial Affairs, EC

Mohamed Kabbaj, Chairman, Joint Development Committee

S, Balabanoff, Acting Head, Economics and Finance Department, OPEC

Jesus Seade, Deputy Director-General, WTO

Kumiharu Shigehara, Head of Economics Department, OECD

James D. Wolfensohn, President, World Bank

Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee)

PRESS COMMUNIQUÉS

Fifty-Third Meeting, Washington, D.C., September 30, 1996

1. The fifty-third Meeting of the Development Committee was held in Washington, D.C. on September 30, 1996 under the chairmanship of Mr. Mohamed Kabbaj, Minister of Finance and Foreign Investment of Morocco.1

Resolving Debt Problems of the Heavily Indebted Poor Countries (HIPCs)

2. The Committee expressed its appreciation to the Bank and Fund for the progress made since its last meeting and endorsed the Action Program for the HIPC Initiative. It urged the Bank and Fund, working closely with donors and other creditors, to move swiftly to implement the Initiative.

3. Members reiterated their support for the Initiative’s basic objective—ensuring that HIPCs demonstrating a track record of sustained strong policy performance are able to achieve overall external debt sustainability, enabling them to exit from the rescheduling process and to strengthen their poverty reduction programs. They recognized that the HIPC Initiative commits the international financial community to take additional action to reduce eligible countries’ debt burdens to sustainable levels where full use of existing debt-relief mechanisms is unlikely to be sufficient.

4. Members agreed that coordinated action by all creditors was critical to the Initiative’s success. The assistance to be provided by each group of creditors should be consistent with the guiding principles agreed at the Committee’s April 1996 meeting, and would be based on the need to:

(a) deliver debt sustainability; (b) share broadly and equitably the cost of the Initiative; and (c) preserve the preferred creditor status of the multilateral financial institutions. Ministers stressed that the Initiative should be implemented flexibly, on a case-by-case basis, and with full participation by debtor governments.

5. Ministers also welcomed the commitment of the IMF, reflected in the statement of the Interim Committee on September 29, to participate in the enhanced assistance to be provided under the HIPC Initiative through special ESAF operations, including long-maturity loans or grants.

6. Members supported the World Bank’s proposed $500 million initial contribution, and noted President Wolfensohn’s announced readiness to recommend to the Board of Executive Directors additional contributions, provided future net income of the Bank would so permit, that there is eqiutable burden sharing by creditors, and these funds are needed to meet the Bank’s own share of the burden. Members supported as well the enhanced assistance (including IDA grants) the Bank intends to provide in selected cases when needed.

7. Given the significant share of debt owed by the poorest and most indebted countries to bilateral creditors, Ministers welcomed the indication from the Paris Club that it was ready to go beyond Naples Terms to provide debt reduction of up to 80 percent for countries qualifying for additional relief within the HIPC Initiative, and that its decisions will be made on a case-by-case basis according to its usual rules, to achieve an exit from unsustainable debt. They suggested the Paris Club, the international financial institutions, and all involved creditors coordinate their actions to deliver needed debt relief consistent with the Initiative’s basic principles noted in paragraphs 3 and 4 above.

8. Ministers welcomed the readiness to participate in the Initiative indicated by several multilateral agencies, and urged other multilaterals to define their participation as soon as possible. The Committee agreed that the proposed multilateral HIPC Trust Fund, to be administered by IDA, would make an effective contribution to the success of the Initiative, Members expressed appreciation to those bilateral donors which had indicated at this early stage their intention to contribute to the Trust Fund and encouraged others to do so as well.

9. Ministers requested the IMF and World Bank to begin implementation of the Initiative for the first potentially eligible countries before the end of 1996 and to report back to the Committee at its next meeting on progress achieved in implementing the Initiative.

International Development Association (IDA)

10. Ministers reiterated their strong support for IDA and its central importance to the global effort to reduce poverty; therefore, it is important that all donors ensure the success of IDA 11 by fully respecting their commitments on time. The Committee welcomed the increased IBRD grant to IDA of $600 million this year.

11. Ministers recognized that the IDA 11 agreement reflects a significant reduction in donor contributions from previous levels. They asked IDA management and donor representatives to work together in the next several months to help ensure adequate and secure future funding for IDA. Ministers will discuss these and related matters as they consider the prospects for IDA funding at their next meeting.

Multilateral Investment Guarantee Agency (MIGA)

12. Ministers noted that MIGA’s activities had grown appreciably along with the expansion of foreign private investment in developing countries. They welcomed the recent rapid expansion in demand for MIGA services and recognized that, as a result, MIGA is quickly approaching the limits of its financial capacity. Ministers requested that the MIGA management and Executive Board address MIGA’s resource constraints soon and report on this subject at the Committee’s next meeting.

World Trade Organization (WTO)

13. The Committee expressed its appreciation to WTO Director-General Renato Ruggiero for his valuable briefing on key issues likely to be addressed at the First WTO Ministerial Meeting in December. Ministers agreed with Mr. Ruggiero on the importance of trade as a formidable engine of economic growth for all nations and on the opportunities and challenges offered by globalization. They requested the Bank and Fund to assist those countries not yet members of the WTO to join the organization, and to assist all members, particularly the poorest, to become more fully integrated into the multilateral trading system. Ministers expressed their support for closer collaboration between the WTO, the Fund, and the Bank and offered the Director-General and the WTO best wishes for a successful Ministerial Meeting.

Next Meeting

14. The Committee’s next meeting will be held on April 29, 1997 in Washington, D.C.

Fifty-Fourth Meeting, Washington, D.C., October 3, 1996

1. The fifty-fourth meeting of the Development Committee was held in Washington, D.C. on October 3, 1996. The Committee unanimously reselected Minister Mohamed Kabbaj as Chairman of the Committee for a second two-year term Chairman Kabbaj, Morocco’s Minister of Finance and Foreign Investment, has presided over the Committee since its April 1995 meeting.

Fifty-Fifth Meeting, Washington, D.C., April 29, 1997

1. The fifty-fifth meeting of the Development Committee was held in Washington, D.C. on April 29, 1997 under the chairmanship of Mr. Mohamed Kabbaj, Minister of Finance and Foreign Investment of Morocco.2

Implementation of the Debt Initiative for Heavily Indebted Poor Countries

2. The Committee welcomed the substantial progress made since its last meeting in implementing the HIPC Initiative: the Bank and the Fund Executive Boards have taken a decision on Uganda that would, subject to satisfactory assurances on the participation of other creditors and following a review of Uganda’s further progress on adjustment and reform, have an effect on its debt service of a reduction in its multilateral and bilateral debt by about 20 percent—or about S700 million—in April 1998; there is also a preliminary agreement on the eligibility of three other countries (Bolivia, Burkina Faso, and Côte d’Ivoire); and the necessary analysis for several other countries is well under way.

3. Ministers reaffirmed the importance of implementing the Initiative in accordance with the guiding principles and the Program of Action agreed upon by the Committee in 1996, Ministers stressed the importance of adequate interim financing by all creditors. They welcomed the recent Bank and Fund Board decisions on implementing the Initiative, which demonstrate that, with determination and close collaboration by all partners, governments that show strong commitment to reform and economic and social development can be placed on a track to achieve a sustainable external debt position.

4. Ministers expressed appreciation for the close working relationships between the Bretton Woods institutions, other multilaterals, the Paris Club, and other bilateral creditors. They also expressed appreciation to the governments that have made voluntary contributions to the HIPC Trust Fund, and to those that have indicated their readiness to contribute to the IMF ESAF-HIPC Trust; they urged other governments to do so as well.

Multilateral Investment Guarantee Agency (MIGA)

5. Ministers noted the progress made by MIGA’s Board and Management in addressing MIGA’s resource constraints. The Committee expressed broad support for MIGA’s continued growth in response to expanding demand for its services. As MIGA is rapidly approaching the limits of its financial capacity, ministers urged the MIGA Board, together with other parties involved, to resolve in an expeditious manner the remaining issues on how best to obtain adequate resources, and report to the Committee at its next meeting.

Partnership for Capacity Building in Africa

6. Africa’s future economic and social progress will depend heavily on today’s investments in human capital and institutional capabilities. Past efforts in capacity building have not had wide success in fostering effective institutions and sustainable transfer of skills, in part because they did not foster local ownership. Thus, the Committee welcomed the initiative taken by African governments to identify and address this fundamental requirement. The Committee appreciated the high degree of African ownership and commitment to take their own actions on capacity building, which are reflected in this effort. Ministers encouraged the World Bank to continue to provide strong support for this African initiative, and to help build support from others in the international community as the Partnership’s program develops.

Strengthening Support for Development Cooperation

7. Developing countries have made progress in reducing poverty in recent years, but in the poorest countries it remains pervasive and deep. Further advances depend primarily on domestic efforts, but integration into the international trading system, and access to adequate external resource flows, are also essential. Ministers stressed the central importance of improving the enabling environment for private investment; moreover, the need to ensure adequate access to official development assistance (ODA), notwithstanding donor’s increasing budgetary pressures and competing demands, is a matter of great concern.

8. To strengthen support for development cooperation and help generate necessary ODA flows, ministers agreed to redouble their efforts to ensure that aid resources are effectively mobilized, delivered, and used. The Committee agreed that improved coordination, and strengthened partnerships between developing countries, the private sector, and bilateral and multilateral agencies, are essential to improving aid effectiveness.

9. Ministers urged the World Bank to continue to work closely with its partners on realistic and monitorable development goals, adapted to specific country conditions and with full ownership by the countries themselves. In this respect, generally accepted goals such as those focused on poverty reduction, human welfare, and the environment help demonstrate development achievements and lessons learned. Ministers welcomed the recent endorsement by OECD donors of such goals.

10. Ministers agreed that the primary beneficiaries of development aid should be those poor countries committed to economic growth and the reduction of poverty through sound policies and effective use of domestic and external resources. The Committee encouraged IDA and other multilateral agencies to strengthen further the role of policy performance in the allocation of their resources, bearing in mind factors beyond the control of governments, while continuing to help build the capacity of all countries to improve performance. Bilateral donors were encouraged to move further in this direction as well.

11. Ministers welcomed the IMF’s support for adjustment and reform programs under the ESAF, and emphasized the importance of continuing ESAF operations to assist low-income countries.

12. Ministers emphasized the great importance they attach to successful implementation of the IDA 11 agreement. The Committee was encouraged by recently concluded agreements for several other multilateral development bank (MDB) replenishments, and reiterated that continued strong support for MDBs by all shareholders, on a fair burden-sharing basis, is essential to preserve their multilateral character and to meet the key challenges of sustainable development.

Strategic Compact

13. The Committee welcomed the World Bank’s Strategic Compact, which aims to improve the level and quality of front-line services and strengthen overall development effectiveness by enhancing project quality and by making the Bank more cost-effective, participatory, flexible, and responsive to client needs. Members invited the World Bank Board to monitor closely the implementation of the Strategic Compact and requested periodic reports on progress achieved.

Facilitating Private Involvement in Infrastructure

14. Ministers welcomed the work under way in the World Bank Group to promote private sector investment in infrastructure, and they asked the Bank Group to prepare an Action Program on this subject for the Committee’s next meeting.

Next Meeting

15. The Committee’s next meeting will be held on September 22, 1997 in Hong Kong, China.

Mr. James D. Wolfensohn, President of the World Rank, Mr Michel Camdessus, Managing Director of the International Monetary Fund, and Mr. Qazi Alimullah, Deputy Chairman of the Planning Commission of Pakistan for Finance and Economic Affairs and Chairman of the Group of Twenty-Four addressed the plenary session. Observers from a number of international and regional organizations also attended.

Mr. James D. Wolfensohn, President of the World Bank, Mr. Michel Camdessus, Managing Director of the International Monetary Fund, Mr. Antonio Casas Gonzalez, Governor of the Central Bank of Venezuela and Chairman of the Group of Twenty-Four, and Mr. Richard H. Kaijuka, Minister of Planning and Economic Development of Uganda, addressed the plenary session. Observers from a number of international and regional organisations also attended.

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