Appendix IV. Relations with Other International Organizations
- International Monetary Fund
- Published Date:
- October 2003
In the face of uneven global economic recovery and heightened geopolitical tensions, close cooperation between the IMF and other international organizations continued to be of critical importance over FY2003. In an increasingly integrated financial system, identifying risks and generating sustained and widespread momentum for economic growth require a high level of collaboration among the Fund, the World Bank, the United Nations (UN) and its specialized agencies, the World Trade Organization (WTO), the Organization for Economic Cooperation and Development (OECD), the Bank for International Settlements (BIS), regional development banks, and intergovernmental groups.
Regional Representation and Technical Assistance
The IMF’s offices in Europe and the Regional Office for Asia and the Pacific maintain close ties with other international organizations. In FY2003, the Fund’s offices in Europe were reorganized to establish a new presence in Brussels and to streamline the staffing and management of the three European offices (Paris, Geneva, and Brussels). The new Brussels Office was created to enhance cooperation with European Union institutions, strengthen IMF surveillance activities in the area, and mount more effective outreach with a range of Brussels-based agencies.
The Paris Office remains the center of the IMF’s European representation, liaising with regional and international institutions located in Europe and contributing to the Fund’s European operations focusing on multilateral and regional surveillance. Paris Office staff regularly represent the Fund at donor and surveillance committees of the OECD in Paris, and one member of the Paris Office staff serves on the Secretariat of the Group of Ten (G-10). Additionally, they keep close contact with the BIS in Basel, and attend, on an ad hoc basis, meetings of organizations such as the Financial Action Task Force (FATF), the European Parliament, and the Council of Europe.
The Geneva Office monitors, analyzes, and reports on activities of Geneva-based socioeconomic agencies with particular emphasis on the multilateral trading system, along with trade-related developments in the European Union. These institutions include the WTO, the International Labor Organization (ILO), the UN Conference on Trade and Development (UNCTAD), the UN High Commissioner for Refugees (UNHCR), the UN Office of the High Commissioner for Human Rights (OHCHR), the World Health Organization (WHO), the UN Economic Commission for Europe (ECE), and the Inter-Parliamentary Union.
The IMF’s Regional Office for Asia and the Pacific, located in Tokyo, is responsible for enhancing surveillance and promoting the IMF’s initiatives in the Asia region. The Office works closely with regional groupings, such as the Asia- Pacific Economic Cooperation (APEC), the Association of South East Asian Nations (ASEAN), the South Pacific Forum (FORUM), the South Asian Association for Regional Cooperation (SAARC), the South East Asian Central Banks (SEACEN), and the Executives’ Meeting of East Asia and Pacific Central Banks (EMEAP). In addition to providing the Secretariat for the Manila Framework Group, the Office also maintains close contact with two regional organizations, the Asian Development Bank (ASDB) and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), and with the World Bank’s Office in Japan. It also facilitates the IMF’s participation in the Consultative Group meetings of donor nations held in the Asia and Pacific region.
The Africa Regional Technical Assistance Center (AFRITAC) in East Africa was opened in Dar es Salaam, Tanzania, on October 24, 2002, to strengthen locally based technical assistance and training, and thus to further efforts by the IMF and World Bank, in cooperation with donor parties, to build country’ ownership of poverty reduction efforts. Five such AFRITACs are planned for sub-Saharan Africa; the next to open will strengthen capacity building in West Africa. Originally planned to be based in Abidjan, it has temporarily been relocated to Bamako, Mali, because of civil unrest in Cote d’Ivoire. The IMF provides similar technical assistance to assist its members in improving their economic and fiscal management practices in the Asia-Pacific region through the Pacific Financial Technical Assistance Center (PFTAC) and in the Caribbean through the Caribbean Regional Technical Assistance Center (CARTAC). The IMF also provides policy- related training to public sector officials and private sector managers through its support of the Joint Africa Institute, the Joint Vienna Institute, and the Singapore Regional Training Institute. Each of these facilities offers courses and seminars on topics of relevance to regional capacity building.
Collaboration with the World Bank
The collegial relationship between the IMF and the World Bank has existed since their founding at the Bretton Woods Conference of 1944. As mandated in their respective Articles of Agreements and in the joint 1989 Concordat, each plays an important, complementary role in ensuring the world’s economic growth and stability. Both institutions conduct regular consultations of their senior staff, participate together on missions, attend joint meetings, and share documents. Collaboration at the staff level, both in policy advice and on operational matters, is also guided by the ongoing dialogue between IMF and Bank management.
As the missions of the two institutions have evolved, it has been necessary periodically to redefine the rules of engagement and division of labor between the two organizations, with a view toward enhancing their overall effectiveness. Building upon the momentum of the previous year to strengthen the framework for Bank-Fund collaboration, the two institutions continued in FY2003 to consider ways to streamline and focus conditionality so as to strengthen country ownership of policy reform programs, thereby making them more effective. In August 2002, the Executive Boards of the IMF and the Bank reviewed the experience gained to date in implementing the Guidance Note on Operationalizing Bank-Fund Collaboration in Country Programs and Conditionality, issued in spring 2002. The Guidance Note forms the basis for collaboration on country programs and conditionality between the area departments of the Fund and the regional departments at the Bank. This review indicated broad support for the approach taken in the Guidance Note (see Chapter 4), and recommended that a further review should be undertaken in two years’ time.
The Fund and Bank also cooperate closely in monitoring financial system stability, especially through the Financial Sector Assessment Program (FSAP), which aims to increase the effectiveness of efforts to promote the soundness of financial systems in member countries. Detailed Financial System Stability Assessments (FSSAs) of observance of relevant financial sector standards and codes are a key component of the FSAP and in turn give rise to Reports on Observance of Standards and Codes (ROSCs) as a by-product. The value added from the program derives importantly from its collaborative nature.
On March 14 and 18, 2003, the IMF’s Executive Board reviewed experience to date with the FSAP. Ninety-five countries have already participated or agreed to participate in an FSAP assessment, including a significant number of systemically or regionally important countries and economies. Given the increasing number of countries now’ participating in the FSAP, the Fund and Bank will continue to work closely together over the coming year on developing ways to further streamline, focus, and prioritize the program.
Given synergies with assessments of prudential supervisory standards, the FSAP provides a suitable context to undertake assessments of countries’ efforts in respect of anti-money-laundering (AML) and combating the financing of terrorism (CFT). In its communique of September 28, 2002, the International Monetary and Financial Committee endorsed the earlier conditional agreement by the Boards of the Fund and Bank to add the Financial Action Task Force (FATF) 40 + 8 Recommendations to the list of standards for which ROSCs are prepared. In October 2002, the FATF Plenary endorsed the common AML/CFT methodology document developed by the Fund and Bank over FY2002, and agreed that it would be used in both Fund-Bank-led ROSCs and those led by the FATF and FATF-style regional bodies (FSRBs). Following this endorsement, on October 15, 2002 the Fund and Bank initiated a 12-month pilot program of AML/CFT assessments using the common methodology. It is expected that between 45 and 56 assessments will be completed over this period, including at least 36 led by IMF/Bank staff. Planning and executing the pilot program has involved extensive coordination and cooperation among the Fund, Bank, the FATF, FSRBs, and their members.
The joint Financial Sector Liaison Committee (FSLC) provides another mechanism for close Fund-Bank cooperation in identifying financial system weakness. Established in 1998, the FSLC helps to integrate into a coherent joint work program the various financial sector tasks assigned to the two institutions, and to facilitate coordination with the work of other institutions, especially in relation to reform of the financial sector. In September 2002, the FSLC reported to the Boards of the Fund and the Bank, focusing particularly on its ongoing work to improve the coordination of financial technical assistance between the two institutions, as well as with other donor organizations.
One of the most important areas of IMF and World Bank cooperation is their work toward the common objective of stimulating economic growth through the reduction of poverty and through debt relief. Launched by the Bank and Fund in 1996, the HIPC Initiative is a comprehensive approach to debt reduction for poor countries that entails coordinated action by the international financial community, including multilateral institutions. The HIPC Initiative is based on the country’s continued effort toward macroeconomic adjustment and structural and social policy reforms, while also providing financing for social sector programs— primarily basic health and education. All countries requesting HIPC Initiative assistance must have adopted a Poverty Reduction Strategy Paper (PRSP) through a broad-based participatory process. Fund and Bank staff work closely together in evaluating PRSPs and Interim Poverty Reduction Strategy Papers (I-PRSPs). The staffs of both institutions work together to prepare Joint Staff Assessments (JSAs) of the PRSPs, for referral to the Executive Boards of both institutions for decision. Over FY2003, 28 JSAs were completed by Fund and Bank staff.
Relations with the United Nations
The IMF works closely with the United Nations, through the IMF Special Representative to the UN and through other extensive institutional contacts. The mandate of the Special Representative, operating out of the Office at the United Nations in New York, is to foster communications and cooperation between the IMF and the UN. The most prominent functions of the UN Office include making the IMF’s views known, providing input for the deliberations at the UN on IMF-related issues, keeping the IMF informed of major developments within the UN system, and facilitating cooperation between the institutions.
During FY2003, collaboration between the IMF and the UN continued to focus on the challenges of financing development around the world. Following the commitments made at the UN International Conference on Financing for Development (FFD) in Monterrey, Mexico, in 2001 (the “Monterrey Consensus”), attention has increasingly focused on translating broad concepts for reducing poverty into a program for implementation. In his remarks to the annual High-Level Meeting of the UN Economic and Social Council (ECOSOC) held in New York on July 1, 2002, Managing Director Horst Kohler noted the need for concrete actions for addressing the “foremost challenge” of poverty and achieving measurable progress toward the Millennium Development Goals (MDGs). On July 11–13, 2002, IMF officials met with ministers and representatives of several other international organizations, including the UN, World Bank, OECD, the Asian and African Development Banks, and the European Commission in Rosendal, Norway, for informal discussions on maintaining a dynamic process for progressing the agreements reached at Doha and Monterrey.
Those objectives, and the importance of reducing poverty, were subsequently reaffirmed by Heads of State at the World Summit on Sustainable Development held in Johannesburg, South Africa, during August 29-September 5, 2002. The summit confirmed the primacy of macroeconomic stability and growth as the foundation of sustainable development, and recognized the Poverty Reduction Strategy Paper (PRSP) approach, suitably extended to encompass environmental concerns, as the basis of national sustainable development programs, where applicable. The Plan of Implementation agreed at the summit also confirms the commitments toward reducing poverty in the areas of trade and finance, globalization, institutional arrangements, and governance, all of which are directly relevant to the Fund’s mandate and work. The IMF, World Bank, and United Nations Environment Program (UNEP) presented a joint paper on “Financing for Sustainable Development” at the summit, and IMF staff participated in several panel discussions.
At the following High-Level Meeting of the ECOSOC held on April 14, 2003, Deputy Managing Director Eduardo Aninat reiterated the Fund’s strong commitment to poverty reduction in the context of its mandate, and cochaired a roundtable discussion on the domestic policies required to help achieve the MDGs. The continuing dialogue among the UN’s ECOSOC, the Bretton Woods institutions, and the WTO is an important means of enhancing policy coherence at national, regional, and international levels, since it brings together the different cultures of finance, trade, development, and foreign affairs.
Liaison with Other Intergovernmental Groups
As a member of the Financial Stability Forum (FSF), the IMF takes the lead on developing, organizing, and carrying out a process for assessing Offshore Financial Centers’ adherence to international standards. IMF staff attended the eighth meeting of the FSF held on September 3—4, 2002, in Toronto, Canada, at which progress on development of a methodology for Reports on Standards and Codes was noted. IMF staff also attended the FSF’s second regional meeting with financial stability authorities from the Asia-Pacific region in Beijing on October 11–12, 2002, and the ninth meeting of the FSF in Berlin on March 24—25, 2003. The Chairman of the FSF participated as an observer at the October 2002 and April 2003 meetings of the International Monetary and Financial Committee.
Collaboration between the IMF and World Trade Organization (WTO) takes place formally as well as informally, as outlined in their Cooperation Agreement signed in December 1996. Under the agreement, the IMF has observer status in WTO meetings and regularly attends formal meetings of most WTO bodies. In particular, IMF staff participate in the WTO-led Integrated Framework for Trade-Related Technical Assistance (a joint effort by six agencies, including the World Bank), contributes to the work of the WTO Working Group on Trade, Debt and Finance, and is a regular member of the Committee on Balance of Payments Restrictions. On August 9, 2002, First Deputy Managing Director Anne Krueger met with the outgoing Director-General of the WTO (Mr. Michael Moore) to explore avenues for cooperation in research. The Managing Director subsequently met with the incoming Director-General, Dr. Supachai Pantichpakdi, on October 13, 2002, to discuss areas where the Fund’s cooperation with the WTO may be particularly effective in the support of the Doha Development Agenda.
Throughout FY2003, the IMF continued to participate actively in the meetings and activities of other major intergovernmental groups, including the Group of Seven (G-7), Group of Ten (G-10), Group of Twenty (G-20), and Group of Twenty-Four (G-24). First Deputy Managing Director Anne Krueger attended the Annual Meeting of the G-20 Finance Ministers and Central Bank Governors on November 22–23, 2002. The Managing Director attended the meeting of G-7 Ministers and Central Bank Governors in Paris on February 22, 2003.
Cooperation with Regional Development Banks
Whether working to prevent crises, alleviate poverty, combat financial abuse, or strengthen the global economic system, the IMF works closely with the world’s multilateral and regional development banks. This collaboration includes formulation and implementation of policies in the economic and financial areas, release of information, and exchange of staff visits. In FY2003, the IMF worked with the Islamic Development Bank to facilitate establishment of the Islamic Financial Services Board; with the Inter-American Development Bank (IDB) to address the crisis in Uruguay; and with the African Development Bank (AFDB) to launch the AFRITACs. The Fund also participated with the European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ASDB), World Bank, and other donor organizations in cosponsoring the third Forum on Poverty’ Reduction Strategies for the Commonwealth of Independent States (CIS-7), held in Almaty, Kazakhstan, on December 11–13, 2002. Deputy Managing Director Shigemitsu Sugisaki opened the follow-up high-level CIS-7 conference in Lucerne, Switzerland, in January 2003, which focused on “The Low-Income Countries of the CIS: Progress and Challenges in Transition” (see Box 5.2 in Chapter 5).
Role of IMF Management
In a globalized world, close cooperation among financial, trade, and development organizations is essential. Efforts to prevent crises and to promote growth depend upon the coordinated actions of many international institutions. This is especially true in times of economic uncertainty. IMF management plays an important role in promoting this multilateral collaboration in many international forums.
During April 28-May 3, 2002, Managing Director Horst Köhler conducted his third tour of the African continent since assuming office. He visited Dares Salaam, Kinshasa, Abidjan, Ouagadougou, and Accra, where he attended meetings with heads of state, participated in a series of workshops, and held discussions with a broad cross section of society on a range of topics of importance to Africa. At the High-Level Meeting of the ECOSOC in New York on July 1, 2002, he reaffirmed the IMF’s commitment to the implementation of the Monterrey consensus. The Managing Director addressed the Treasury Select Committee of the House of Commons in London on July 4, 2002, and discussed the IMF’s work program and the fundamental changes it had undertaken in the areas of transparency, surveillance, conditionality, standards and codes, and other areas of the IMF’s core business. At the Symposium to Commemorate the 50th Anniversary of Japan’s membership in the IMF and World Bank, held in Tokyo on September 10, 2002, he spoke of the importance of strong leadership by the advanced economies to bolster investor confidence and sustain global economic recovery, and the specific need for Japan to undertake decisive reforms of the banking and corporate sectors and pursue antideflationary macroeconomic policies. The Managing Director traveled to Latin America during December 6–12, 2002, in order to meet with the presidents of Brazil, Colombia, and Chile—his second visit to Latin America since taking office. On March 11, 2003, he spoke at the Bank of Spain on the prospects for economic recovery in Latin America, noting that Mexico and Chile had been bright spots in an area facing particularly difficult economic circumstances, and that better policies in several countries, including Brazil and Colombia, had enabled them to withstand these pressures reasonably well.
The IMF’s Deputy Managing Directors also attended many conferences, meetings, and seminars throughout the year. On July 17, 2002, First Deputy Managing Director Anne Krueger addressed a National Bureau for Economic Research (NBER) conference on the lessons to be learned from the crisis in Argentina and how these could be used to raise the effectiveness of IMF efforts to prevent and resolve financial crises. Ms. Krueger participated in a panel discussion on “A World Without Globalization” at the World Economic Forum meeting held in Davos, Switzerland, on January 23–28, 2003. Deputy Managing Director Shigemitsu Sugisaki presented remarks on international perspectives on achieving financial stability at the first annual forum of the APEC Finance and Development Program in Beijing on May 26, 2002. Deputy Managing Director Eduardo Aninat delivered the keynote address at the opening of the AFRITAC in East Africa on October 24, 2002, and spoke of the importance of capacity building in Africa to develop strong and independent domestic institutions that are both a precondition to economic development and an insurance policy against external shocks. Mr. Aninat also traveled to Latin America in January 2003, and outlined a “self-help” agenda at conferences at the University of Vina del Mar in Chile and the Central Bank in Lima, Peru.