- International Monetary Fund
- Published Date:
- September 2004
Total international reserves, including gold, increased by 14 percent during 2003 and stood at SDR 2.4 trillion at the end of the year (Table I.1). Foreign exchange reserves, which constitute the largest component of official reserve holdings, grew by 15 percent, to SDR 2.0 trillion. IMF-related assets, which make up the rest of nongold reserves, remained broadly unchanged at SDR 86 billion. The market value of gold held by monetary authorities increased by 9 percent to SDR 256 billion in 2003.1
|Total reserves excluding gold|
|Reserve positions in the IMF||60.6||54.8||47.4||56.9||66.1||66.5||63.5|
|Subtotal, IMF-related assets||81.0||73.2||65.9||76.4||85.7||86.4||83.8|
|Total reserves excluding gold||1,248.0||1,371.0||1,551.3||1,704.3||1,848.9||2,114.4||2,292.5|
|Quantity (millions of ounces)||968.4||967.1||952.1||942.8||930.6||913.1||911.3|
|Value at London market price||197.9||204.5||200.6||207.4||234.6||256.4||260.8|
|Total reserves Including gold||1,446.0||1,575.6||1,751.9||1,911.7||2,083.5||2,370.8||2,553.3|
|Total reserves excluding gold|
|Reserve positions in the IMF||53.9||46.8||39.7||47.0||53.7||52.6||50.6|
|Subtotal, IMF-related assets||69.0||61.5||54.1||62.9||69.5||67.9||66.0|
|Total reserves excluding gold||545.6||587.6||650.3||683.4||722.5||810.6||911.1|
|Quantity (millions of ounces)||808.7||810.4||796.5||783.5||769.8||754.3||752.0|
|Value at London market price||165.3||171.4||167.8||172.4||194.1||211.8||215.2|
|Total reserves Including gold||710.9||759.0||818.1||855.6||916.6||1,022.4||1,126.3|
|Total reserves excluding gold|
|Reserve positions in the IMF||6.7||8.0||7.7||9.9||12.3||13.9||12.9|
|Subtotal, IMF-related assets||11.2||11.7||11.8||13.5||16.2||18.5||17.8|
|Total reserves excluding gold||702.4||783.4||901.0||1,020.9||1,126.4||1,303.8||1,381.4|
|Quantity (millions of ounces)||159.7||156.6||155.6||159.2||160.7||158.8||159.3|
|Value at London market price||32.7||33.1||32.8||35.0||40.5||44.6||45.6|
|Total reserves Including gold||735.1||816.6||933.8||1,055.9||1,166.9||1,348.4||1,427.0|
|Net debtor developing countries|
|Total reserves excluding gold|
|Reserve positions in the IMF||5.0||5.6||5.4||6.4||8.0||9.2||8.8|
|Subtotal, IMF-related assets||8.4||8.7||8.7||9.1||11.0||12.7||12.5|
|Total reserves excluding gold||558.4||618.1||714.4||815.8||900.0||1,052.3||1,113.5|
|Quantity (millions of ounces)||133.3||130.6||129.6||133.2||135.0||133.4||133.9|
|Value at London market price||27.2||27.6||27.3||29.3||34.0||37.5||38.3|
|Total reserves including gold||585.7||645.7||741.7||845.1||934.0||1,089.8||1,151.8|
|Net debtor developing countries without debt-servicing problems|
|Total reserves excluding gold|
|Reserve positions in the IMF||4.6||4.8||4.6||5.7||7.3||8.3||7.9|
|Subtotal, IMF-related assets||7.2||7.2||6.7||7.7||9.2||10.5||10.2|
|Total reserves excluding gold||435.7||496.7||578.3||672.3||761.9||894.9||950.9|
|Quantity (millions of ounces)||87.6||85.4||84.6||88.3||89.9||88.2||88.3|
|Value at London market price||17.9||18.1||17.8||19.4||22.7||24.8||25.3|
|Total reserves Including gold||453.6||514.7||596.2||691.8||784.6||919.7||976.2|
Foreign Exchange Reserve
Foreign exchange reserves accounted for 96 percent of nongold assets at the end of 2003. The developing countries, which held 63 percent of all foreign exchange reserves at the end of 2003, increased their holdings by 16 percent, to SDR 1.3 trillion, continuing the trend set in recent years. During 2003, the foreign exchange holdings of industrial countries rose by 14 percent, to SDR 743 billion.
In 2003, the oil-exporting developing countries’ foreign exchange assets, which amount to nearly 10 percent of all developing countries’ foreign exchange reserves, increased by 9 percent, to SDR 113 billion. The foreign exchange reserves of the net creditor developing country group rose by 11 percent, to SDR 246 billion, and those of net debtor countries grew by 17 percent, to SDR 1.0 trillion. Foreign exchange reserves of net debtors without debt-servicing problems increased by 18 percent, to SDR 884 billion, while those of countries with debt-servicing problems increased by 14 percent, to SDR 155 billion.
Holdings of IMF-Related Assets
During 2003, total IMF-related assets (that is, reserve positions in the IMF and SDRs) increased by less than 1 percent, following increases of more than 10 percent in the two preceding years. Industrial member countries hold a majority of IMF-related assets: 79 percent at the end of 2003. Members’ reserve positions in the IMF-which consist of members’ reserve tranche and creditor positions-remained broadly unchanged at SDR 67 billion, with the SDR holdings of IMF members remaining unchanged at SDR 20 billion.
The market value of gold reserves increased by 9 percent in 2003, to SDR 256 billion, reflecting an 11 percent increase in the SDR price of gold and a 2 percent decline in the physical stock of official gold. The share of gold in officially held reserves has declined gradually to 11 percent by the end of 2003, whereas, in the early 1980s, gold made up about half of all officially held reserves. Most of the gold reserves (83 percent) are held by industrial countries: gold constituted 21 percent of these countries’ total reserves at the end of 2003. Gold reserves accounted for 3 percent of the total reserves of the developing countries.
Developments During the First Quarter of 2004
Total reserve assets rose by SDR 183 billion during the first quarter of 2004, whereas foreign exchange reserves increased by SDR 181 billion over the same period. Reflecting an increase in the SDR price of gold since the end of 2003, the market value of gold reserves increased by nearly SDR 5 billion during the first quarter of 2004, while the physical stock of official gold declined by 2 million ounces. Holdings of IMF-related assets declined by SDR 3 billion.
Currency Composition of Foreign Exchange Reserves
The currency composition of foreign exchange reserves has changed gradually over the past decade, with the share of U.S. dollar holdings in foreign exchange reserves rising from 53 percent in 1994 to 67 percent in 2001 (Table I.2).2 In 2002 and 2003, however, the share of U.S. dollar holdings declined to 64 percent. Notwithstanding a substantial increase in official reserves held in U.S. dollars over these two years, the weakening of the U.S. dollar vis-à-vis other major currencies implied a decline in the share of U.S. dollar holdings (see the last paragraph for details). The euro, which replaced 11 European currencies and the European currency unit (ECU) on January 1, 1999, accounted for 20 percent of total foreign exchange reserves in 2003, higher than its average since 1999. Given that, at the introduction of the euro, the Eurosystem’s reserves previously denominated in euro legacy currencies3 became domestic assets of the euro area, the share of the euro in 1999-2003 is not directly comparable with the previous years’ combined share of the four euro legacy currencies identified in Table I.2: deutsche mark, French franc, Netherlands guilder, and private ECU. However, after adjusting the data to take into account only holdings of these currencies outside the euro area, their combined share in 1998 was virtually identical to the share of the euro in 1999.
The share of the Japanese yen in total foreign exchange reserves declined from 8 percent at the end of 1994 to 5 percent at the end of 2003. During the past decade, the share of pound sterling rose above 4 percent, while that of the Swiss franc remained below 1 percent. The share of unspecified currencies, which include currencies not identified in Table I.2, as well as foreign exchange reserves for which no information on currency composition is available, was 7 percent in 2003.
For industrial countries, the share of U.S. dollar holdings increased throughout the 1990s, peaking at 73 percent in 2001 and amounting to 71 percent at the end of 2003. In 2003, the shares of the euro and the yen in industrial countries’ foreign exchange reserves declined slightly to 21 and 4 percent, respectively. Shares of pound sterling and the Swiss franc have remained broadly constant over the past ten years, but the share of unspecified currencies fell to 2 percent in recent years.
The share of the U.S. dollar in developing countries’ foreign exchange reserves declined to 59 percent in 2003, close to the historical average over the last decade. Holdings of the euro rose to 19 percent of those countries’ foreign exchange reserves, one percentage point higher than in 2002. Over the past decade, the share of the yen has gradually decreased by about 2 percentage points, to 5 percent at the end of 2003, while the share of pound sterling has increased by about 2 percentage points, to 6 percent. The share of the Swiss franc has remained below 1 percent since 1997. Unspecified currencies accounted for 10 percent of developing countries’ foreign exchange reserves in 2003.
Changes in the SDR value of foreign exchange reserves can be decomposed into quantity and valuation (price) changes (Table I.3). Official reserves held in U.S. dollars increased by SDR 161 billion in 2003, as an increase of SDR 263 billion in the quantity of U.S. dollar holdings was offset by a valuation decline of SDR 102 billion. Euro holdings increased by SDR 56 billion, reflecting a quantity increase of SDR 22 billion and a valuation increase of SDR 34 billion. Japanese yen holdings increased by SDR 5 billion as quantity and valuation each increased by more than SDR 2 billion. Driven by the quantity effect, in 2003, pound sterling holdings increased by SDR 12 billion, whereas Swiss franc holdings declined by more than SDR 1 billion.
|Change In holdings||29,536||69,406||116,520||88,197||18,286||102,343||142,211||89,258||20,653||161,210|
|Change in holdings||5,969||-24||2,636||-3,193||979||7,024||20,951||-2,901||931||4,693|
|Change in holdings||3,603||2,714||6,753||6,235||1,103||6,165||9,204||7,270||11,262||12,008|
|Change in holdings||-1,157||-94||534||-3||-69||78||2,053||437||1,535||-1,495|
|Change in holdings||-||-||-||-||-||5,6492||63,575||27,158||60,921||55,520|
|Change in holdings||12,782||14,542||15,472||11,766||-11,410||-||-||-||-||-|
|Change in holdings||1,981||2,069||-872||-3,398||2,229||-||-||-||-||-|
|Change in holdings||-417||-171||-182||1,125||-562||-||-||-||-||-|
|European currency unit|
|Change in holdings||960||1,665||985||-3,240||-47,848||-||-||-||-||-|
|Sum of the above3|
|Change in holdings||53,257||90,107||141,845||97,488||-37,292||121,259||237,993||121,222||95,301||231,936|
|Total official holdings4|
|Change in holdings||60,440||122,044||154,252||108,692||-30,649||130,779||187,663||142,444||135,262||264,818|
Official monetary authorities are central banks and also currency boards, exchange stabilization funds, and treasuries, to the extent that they perform monetary authorities’ functions.
This table incorporates revisions to historical data that were first announced in a press release issued on November 19, 2003 (see www.imf.org/external/np/sec/pr/2003/pr03196.htm). The main revisions were to report as euro holdings certain reserves that were originally reported (including in the 2003 Annual Report) as being held in unspecified currencies.
Those foreign exchange reserves that, up to December 31, 1998, were denominated in the former national currencies of countries in the euro area and private ECUs.
The tables in this appendix supplement the information given in Section 7 on the IMF’s financial operations and policies. Components may not sum to total because of rounding.
|Financial||Number of Arrangements||Amounts Committed Under Arrangements (In millions of SDRs)|
|Financial Year||Number of Arrangements as of April 30||Amounts Committed Under Arrangement as of April 30|
(In millions of SDRs)
|Arrangement Dates||Amounts Approved||Undrawn Balance|
|Member||Effective date||Expiration date||Prior to FY2004||In FY2004||At date of termination||As of April 30, 2004|
|Bosnia and Herzegovina||8/2/2002||2/29/2004||68||-||-||-|
|Total Stand-By Arrangements||42,807||14,519||536||19,325|
|Serbia and Montenegro||5/14/2002||5/13/2005||650||-||-||350|
|Total Extended Arrangements||4,432||-||-||474|
|Arrangement Dates||Amounts Approved||Undrawn Balance|
|Member||Effective date||Expiration date||Prior to FY2004||In FY2004||At date of termination||As of April 30, 2004|
|Congo, Dem. Rep. of||6/12/2002||6/11/2005||580||-||-||80|
|Disbursements||Repurchases and Repayments||Total Fund Credit Outstanding2|
|Financial Year||Purchases1||Trust Fund loans||SAF loans||PRGF loans||Total||Repurchases||Trust Fund repayments||SAF/PRGF repayments||Total|
|Member||Reserve Tranche||Emergency Assistance||Stand-By/Credit Tranche||Extended Fund Facility||SRF||Total Purchases||PRGF Loans||Total Purchases and Loans|
|Bosnia and Herzegovina||-||-||36||-||-||36||-||36|
|Congo, Dem. Rep. of||-||-||-||-||-||-||53||53|
|Serbia and Montenegro||-||-||-||100||-||100||-||100|
|Member||Stand-By/Credit Tranche||Extended Fund Facility||Others1||Total Repurchases||SAF/PRGF and Trust Fund Repayments2||Total Repurchases and Repayments|
|Bosnia and Herzegovina||36||-||-||36||-||36|
|Central African Rep.||-||-||-||-||1||1|
|Congo, Rep. of||2||-||2||3|
|Papua New Guinea||10||-||-||10||-||10|
|Serbia and Montenegro||33||-||-||33||-||33|
|St. Kitts and Nevis||1||-||-||1||-||1|
|Yemen, Rep. of||-||7||-||7||13||20|
|(In millions of SDRs)|
|Supplemental Reserve Facility||-||-||-||7,100||12,655||-||4,085||5,875||15,700||6,027|
|Compensatory Financing Facility||3,021||1,602||1,336||685||2,845||3,032||2,992||745||413||119|
|Systemic Transformation Facility||3,848||3,984||3,984||3,869||3,364||2,718||1,933||1,311||644||154|
|Subtotal (General Resources Account)||32,140||36,268||34,539||49,701||60,651||43,968||42,219||52,081||65,978||62,153|
|(Percent of total)|
|Supplemental Reserve Facility||-||-||-||13||19||-||9||10||25||9|
|Compensatory Financing Facility||8||4||3||1||4||6||6||1||1||—3|
|Systemic Transformation Facility||10||9||10||7||5||5||4||2||1||—3|
|Subtotal (General Resources Account)||87||86||85||89||90||87||87||88||91||90|
|PRGF Trust||PRGF-HIPC Trust|
|Subsidy contributions “as needed”1||Loan commitments2||Subsidies and HIPC grant contributions “as needed”3|
|Major industrial countries||2,299.9||12,864.8||880.5|
|Other advanced countries||977.8||2,452.8||299.7|
|Iran, Islamic Republic of||1.9||-||2.2|
|United Arab Emirates||-||-||3.8|
|Other developing countries||182.9||355.6||221.3|
|Micronesia, Federated States of||-||-||0.04|
|St. Vincent and the Grenadines||-||-||0.1|
|Countries in transition||13.4||-||42.9|
|Pending contributions to the PRGF-HIPC Trust (“as needed”)3||24.0|
|Trinidad and Tobago||-||-||1.6|
|Net debtor countries|
|All Participants1||Industrial Countries2||All nonindustrial countries||Net creditor countries3||All net debtor countries3||Heavily Indebted poor countries|
|Period Beginning||SDR Interest Rate and Unadjusted Rate of Remuneration1||Basic Rate of Charge1||Period Beginning||SDR Interest Rate and Unadjusted Rate Of Remuneration1||Basic Rate of Charge1|
|May 1||1.75||2.31||November 3||1.59||2.10|
|May 5||1.72||2.27||November 10||1.59||2.10|
|May 12||1.72||2.27||November 17||1.58||2.09|
|May 19||1.68||2.22||November 24||1.58||2.09|
|June 2||1.66||2.19||December 8||1.59||2.10|
|June 9||1.60||2.11||December 15||1.59||2.10|
|June 16||1.51||1.99||December 22||1.58||2.09|
|June 23||1.50||1.98||December 29||1.57||2.07|
|July 7||1.51||1.99||January 5||1.59||2.10|
|July 14||1.49||1.97||January 12||1.58||2.09|
|July 21||1.49||1.97||January 19||1.57||2.07|
|July 28||1.51||1.99||January 26||1.57||2.07|
|August 4||1.52||2.01||February 2||1.59||2.10|
|August 11||1.53||2.02||February 9||1.60||2.11|
|August 18||1.52||2.01||February 16||1.60||2.11|
|August 25||1.53||2.02||February 23||1.61||2.13|
|September 1||1.55||2.05||March 1||1.62||2.14|
|September 8||1.54||2.03||March 8||1.61||2.13|
|September 15||1.55||2.05||March 15||1.61||2.13|
|September 22||1.55||2.05||March 22||1.60||2.11|
|September 29||1.54||2.03||March 29||1.58||2.09|
|October 6||1.54||2.03||April 5||1.61||2.13|
|October 13||1.54||2.03||April 12||1.61||2.13|
|October 20||1.55||2.05||April 19||1.60||2.11|
|October 27||1.58||2.09||April 26||1.62||2.14|
|Member||Effective Date of Acceptance||Member||Effective Date of Acceptance|
|Algeria||September 15, 1997||Iceland||September 19, 1983|
|Antigua and Barbuda||November 22, 1983||India||August 20, 1994|
|Argentina||May 14, 1968||Indonesia||May 7, 1988|
|Armenia||May 29, 1997||Ireland||February 15, 1961|
|Australia||July 1, 1965||Israel||September 21, 1993|
|Austria||August 1, 1962||Italy||February 15, 1961|
|Bahamas, The||December 5, 1973||Jamaica||February 22, 1963|
|Bahrain||March 20, 1973||Japan||April 1, 1964|
|Bangladesh||April 11, 1994||Jordan||February 20, 1995|
|Barbados||November 3, 1993||Kazakhstan||July 16, 1996|
|Belarus||November 5, 2001||Kenya||June 30, 1994|
|Belgium||February 15, 1961||Kiribati||August 22, 1986|
|Belize||June 14, 1983||Korea||November 1, 1988|
|Benin||June 1, 1996||Kuwait||April 5, 1963|
|Bolivia||June 5, 1967||Kyrgyz Republic||March 29, 1995|
|Botswana||November 17, 1995||Latvia||June 10, 1994|
|Brazil||November 30, 1999||Lebanon||July 1, 1993|
|Brunei Darussalam||October 10, 1995||Lesotho||March 5, 1997|
|Bulgaria||September 24, 1998||Libya||June 21, 2003|
|Burkina Faso||June 1, 1996||Lithuania||May 3, 1994|
|Cambodia||January 1, 2002||Luxembourg||February 15, 1961|
|Cameroon||June 1, 1996||Macedonia, FYR||June 19, 1998|
|Canada||March 25, 1952||Madagascar||September 18, 1996|
|Central African Republic||June 1, 1996||Malawi||December 7, 1995|
|Chad||June 1, 1996||Malaysia||November 11, 1968|
|Chile||July 27, 1977||Mali||June 1, 1996|
|China||December 1, 1996||Malta||November 30, 1994|
|Comoros||June 1, 1996||Marshall Islands||May 21, 1992|
|Congo, Democratic Republic of||February 10, 2003||Mauritania||July 19, 1999|
|Congo, Republic of||June 1, 1996||Mauritius||September 29, 1993|
|Costa Rica||February 1, 1965||Mexico||November 12, 1946|
|Cote d’Ivoire||June 1, 1996||Micronesia, Federated States of||June 24, 1993|
|Croatia||May 29, 1995||Moldova||June 30, 1995|
|Cyprus||January 9, 1991||Mongolia||February 1, 1996|
|Czech Republic||October 1, 1995||Morocco||January 21, 1993|
|Denmark||May 1, 1967||Namibia||September 20, 1996|
|Djibouti||September 19, 1980||Nepal||May 30, 1994|
|Dominica||December 13, 1979||Netherlands||February 15, 1961|
|Dominican Republic||August 1, 1953||New Zealand||August 5, 1982|
|Ecuador||August 31, 1970||Nicaragua||July 20, 1964|
|El Salvador||November 6, 1946||Niger||June 1, 1996|
|Equatorial Guinea||June 1, 1996||Norway||May 11, 1967|
|Estonia||August 15, 1994||Oman||June 19, 1974|
|Fiji||August 4, 1972||Pakistan||July 1, 1994|
|Finland||September 25, 1979||Palau||December 16, 1997|
|France||February 15, 1961||Panama||November 26, 1946|
|Gabon||June 1, 1996||Papua New Guinea||December 4, 1975|
|Gambia, The||January 21, 1993||Paraguay||August 22, 1994|
|Georgia||December 20, 1996||Peru||February 15, 1961|
|Germany||February 15, 1961||Philippines||September 8, 1995|
|Ghana||February 21, 1994||Poland||June 1, 1995|
|Greece||July 7, 1992||Portugal||September 12, 1988|
|Grenada||January 24, 1994||Qatar||June 4, 1973|
|Guatemala||January 27, 1947||Romania||March 25, 1998|
|Guinea||November 17, 1995||Russian Federation||June 1, 1996|
|Guinea-Bissau||January 1, 1997||Rwanda||December 10, 1998|
|Guyana||December 27, 1966||St. Kitts and Nevis||December 3, 1984|
|Haiti||December 22, 1953||St Lucia||May 30, 1980|
|Honduras||July 1, 1950||St. Vincent and the Grenadines||August 24, 1981|
|Hungary||January 1, 1996||Samoa||October 6, 1994|
|San Marino||September 23, 1992||Thailand||May 4, 1990|
|Saudi Arabia||March 22, 1961||Timor-Leste||July 23, 2002|
|Senegal||June 1, 1996||Togo||June 1, 1996|
|Serbia and Montenego||May 15, 2002||Tonga||March 22, 1991|
|Seychelles||January 3, 1978||Trinidad and Tobago||December 13, 1993|
|Sierra Leone||December 14, 1995||Tunisia||January 6, 1993|
|Singapore||November 9, 1968||Turkey||March 22, 1990|
|Slovak Republic||October 1, 1995||Uganda||April 5, 1994|
|Slovenia||September 1, 1995||Ukraine||September 24, 1996|
|Solomon Islands||July 24, 1979||United Arab Emirates||February 13, 1974|
|South Africa||September 15, 1973||United Kingdom||February 15, 1961|
|Spain||July 15, 1986||United States||December 10, 1946|
|Sri Lanka||March 15, 1994||Uruguay||May 2, 1980|
|Sudan||October 29, 2003||Uzbekistan||October 15, 2003|
|Suriname||June 29, 1978||Vanuatu||December 1, 1982|
|Swaziland||December 11, 1989||Venezuela||July 1, 1976|
|Sweden||February 15, 1961||Yemen, Republic of||December 10, 1996|
|Switzerland||May 29, 1992||Zambia||April 19, 2002|
|Tanzania||July 15, 1996||Zimbabwe||February 3, 1995|
|This classification system is based on members’ actual, de facto arrangements as identified by IMF staff, which may differ from their officially announced arrangements. The scheme ranks exchange rate arrangements on the basis of their degree of flexibility and the existence of formal or informal commitments to exchange rate paths. It distinguishes among different forms of exchange rate regimes, in addition to arrangements with no separate legal tender, to help assess the implications of the choice of exchange rate arrangement for the degree of monetary policy independence. The system presents members’ exchange rate regimes against alternative monetary policy frameworks with the intention of using both criteria as a way of providing greater transparency in the classification scheme and to illustrate that different exchange rate regimes can be consistent with similar monetary policy frameworks. The following explains the categories.|
|Exchange Rate Regimes|
|Exchange Arrangements with No Separate Legal Tend|
|The currency of another country circulates as the sole legal tender (formal dollarization), or the member belongs to a monetary or currency union in which the same legal tender is shared by the members of the union. Adopting such regimes implies the complete surrender of the monetary authorities’ independent control over domestic monetary policy.|
|Currency Board Arrangements|
|A monetary regime based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate, combined with restrictions on the issuing authority to ensure the fulfillment of its legal obligation. This implies that domestic currency will be issued only against foreign exchange and that it will remain fully backed by foreign assets, eliminating traditional central bank functions, such as monetary control and lender of last resort, and leaving little scope for discretionary monetary policy. Some flexibility may still be afforded, depending on how strict the banking rules of the currency board arrangement are.|
|Other Conventional Fixed-Peg Arrangements|
|The country (formally or de facto) pegs its currency at a fixed rate to another currency or a basket of currencies, where the basket is formed from the currencies of major trading or financial partners and weights reflect the geographical distribution of trade, services, or capital flows. The currency composites can also be standardized, as in the case of the SDR. There is no commitment to keep the parity irrevocably. The exchange rate may fluctuate within narrow margins of less than ±1 percent around a central rate-or the maximum and minimum value of the exchange rate may remain within a narrow margin of 2 percent-for at least three months. The monetary authority stands ready to maintain the fixed parity through direct intervention (i.e., via sale/purchase of foreign exchange in the market) or indirect intervention (e.g., via aggressive use of interest rate policy, imposition of foreign exchange regulations, exercise of moral suasion that constrains foreign exchange activity, or through intervention by other public institutions). Flexibility of monetary policy, though limited, is greater than in the case of exchange arrangements with no separate legal tender and currency boards because traditional central banking functions are still possible, and the monetary authority can adjust the level of the exchange rate, although relatively infrequently.|
|Pegged Exchange Rates Within Horizontal Bands|
|The value of the currency is maintained within certain margins of fluctuation of at least ±1 percent around a fixed central rate or the margin between the maximum and minimum value of the exchange rate exceeds 2 percent. It also includes arrangements of countries in the exchange rate mechanism (ERM) of the European Monetary System (EMS) that was replaced with the ERM II on January 1, 1999. There is a limited degree of monetary policy discretion, depending on the band width.|
|The currency is adjusted periodically in small amounts at a fixed rate or in response to changes in selective quantitative indicators, such as past inflation differentials vis-à-vis major trading partners, differentials between the inflation target and expected inflation in major trading partners, and so forth. The rate of crawl can be set to generate inflation-adjusted changes in the exchange rate (backward looking) or set at a preannounced fixed rate and/or below the projected inflation differentials (forward looking). Maintaining a crawling peg imposes constraints on monetary policy in a manner similar to a fixed-peg system.|
|Exchange Rates Within Crawling Bands|
|The currency is maintained within certain fluctuation margins of at least ±1 percent around a central rate-or the margin between the maximum and minimum value of the exchange rate exceeds 2 percent-and the central rate or margins are adjusted periodically at a fixed rate or in response to changes in selective quantitative indicators. The degree of exchange rate flexibility is a function of the band width. Bands either are symmetric around a crawling central parity or widen gradually with an asymmetric choice of the crawl of upper and lower bands. (In the latter case, there may be no preannounced central rate.) The commitment to maintain the exchange rate within the band imposes constraints on monetary policy, with the degree of policy independence being a function of the band width.|
|Managed Floating with No Predetermined Path for the Exchange|
|The monetary authority attempts to influence the exchange rate without having a specific exchange rate path or target. Indicators for managing the rate are broadly judgmental (e.g., balance of payments position, international reserves, parallel market developments), and adjustments may not be automatic. Intervention may be direct or indirect.|
|The exchange rate is market determined, with any official foreign exchange market intervention aimed at moderating the rate of change and preventing undue fluctuations in the exchange rate, rather than establishing a level for it.|
|Monetary Policy Frameworks|
|The exchange rate regimes are presented alongside monetary policy frameworks in order to present the role of the exchange rate in broad economic policy and help identify potential sources of inconsistency in the monetary-exchange rate policy mix.|
|Exchange Rate Anchor|
|The monetary authority stands ready to buy/sell foreign exchange at given quoted rates to maintain the exchange rate at its preannounced level or range; the exchange rate serves as the nominal anchor or intermediate target of monetary policy. This type of regime covers exchange rate regimes with no separate legal tender; currency board arrangements; fixed pegs with and without bands; and crawling pegs with and without bands.|
|Monetary Aggregate Anchor|
|The monetary authority uses its instruments to achieve a target growth rate for a monetary aggregate, such as reserve money, Ml, or M2, and the targeted aggregate becomes the nominal anchor or intermediate target of monetary policy.|
|This involves the public announcement of medium-term numerical targets for inflation with an institutional commitment by the monetary authority to achieve these targets. Additional key features include increased communication with the public and the markets about the plans and objectives of monetary policymakers and increased accountability of the central bank for attaining its inflation objectives. Monetary policy decisions are guided by the deviation of forecasts of future inflation from the announced target, with the inflation forecast acting (implicitly or explicitly) as the intermediate target of monetary policy.|
|Fund-Supported or Other Monetary Program|
|This involves implementation of monetary and exchange rate policies within the confines of a framework that establishes floors for international reserves and ceilings for net domestic assets of the central bank. Indicative targets for reserve money may be appended to this system.|
|The country has no explicitly stated nominal anchor but rather monitors various indicators in conducting monetary policy, or there is no relevant information available for the country.|
|Exchange Rate Regime (number of countries)||Exchange rate anchor||Monetary aggregate target||Inflation-targeting framework||IMF-supported or other monetary program||Other|
|Exchange arrangements with no separate legal tender (41)||Another currency as legal tender||Euro area3|
|CFA franc zone||Austria|
|El Salvador4||Barbuda||Burkina Faso*||Central African Rep.||France|
|Marshall Islands||Grenada||Guinea-Bissau||Congo, Rep. of||Greece|
|Micronesia, Fed. States of||St. Kittsand Nevis||Mali||Equatorial Guinea||Ireland|
|Palau||St. Vincent and the Grenadines||Senegal||Luxembourg|
|Currency board arrangements (7)||Bosnia and Herzegovina|
|China-Hong Kong SAR|
|Other conventional fixed peg arrangements (41)||Against a single currency (32)||Against a compositite (9)||Chinaf†6|
|Syrian Arab Rep.5|
|United Arab Emirates|
|Pegged exchange rates with in hotizontal bands (4)8||Within a cooperative arrangement (1)||Other band arrangements (3)||Hungary†|
|Denmark9||Cyprus Hungary† Tonga|
|Crawling pegs (5)||Bolivia||Tunisia|
|Exchange rates within crawling bands(5)10||Belarus||Israel†|
|Managed floating with no preannounced path for the exchange rate (49)||Bangladesh*||Czech Rep.||Argentina*||Afghanistan, I.S. of|
|Iran. I.R. of||Kenya*||Iraq|
|Rwanda*||Sao Tome and|
|Vietnam||Trinidad and Tobago|
|Independently floating (35)||Malawi*||Australia||Albania*||Dominican Rep.*3|
|Sri Lanka*||Canada||Congo. Dem.||Liberia3,6|
|Uruguay*||Chile5||Rep. of*||Papua New Guinea3|
|Yemen, Rep. of||Colombia*||Madagascar*||Somalia5,12|
Technical Assistance–Framework Administered Account–Establishment of China Technical Assistance Subaccount
In accordance with the terms and conditions of the Instrument establishing the Framework Administered Account for Technical Assistance Activities (Decision No. 10942-(95/33)),1 as amended, the Fund hereby approves the establishment of the “China Technical Assistance Subaccount,” which shall be used by the Fund to administer resources to be contributed by the government of the People’s Republic of China, as described in EBS/03/61 (5/16/03).
Decision No. 13015-(03/49)
Adopted May 23, 2003
Technical Assistance–Framework Administered Account–Establishment of Iraq Technical Assistance Subaccount
In accordance with the terms and conditions of the Instrument establishing the Framework Administered Account for Technical Assistance Activities (Decision No. 10942-(95/33)),2 as amended, the Fund hereby approves the establishment of the “Technical Assistance Subaccount for Iraq,” which shall be used by the Fund to administer resources to be contributed by the Governments of Australia, Canada, Italy, and the United Kingdom, and any subsequent Contributors, as described in EBS/03/105 (7/15/03).
Decision No. 13062-(03/72)
Adopted July 22, 2003
Overdue Financial Obligations–Strengthened Cooperative Strategy–Review
The Fund has reviewed progress under the strengthened cooperative strategy with respect to overdue financial obligations to the Fund as described in EBS/03/118 (8/14/03). The Fund reaffirms its support for the strengthened cooperative strategy and agrees to extend the availability of the rights approach until end-August 2004 (EBS/03/118, 8/14/03).
Decision No. 13080-(03/80)
Adopted August 21, 2003
General Data Dissemination System–Amendment
The Executive Directors approve the draft amendment to the General Data Dissemination System as set forth in SM/03/212, Sup. 4 (10/29/03).
Decision No. 13126-(03/102)
Adopted November 6, 2003
Income Position for FY2004–Review
The Fund has reviewed the income position for FY2004 in accordance with Rule 1-6(4)(b) (EBS/03/163, 12/5/03).
Decision No. 13145-(03/114)
Adopted December 12, 2003
East African Development Bank–Termination of Status as Prescribed Holder of SDRs
The Fund notes that the status of the East African Development Bank as a prescribed holder of SDRs has been terminated as of December 10, 2003, and concurs in the arrangement made by the East African Development Bank to sell its SDR holdings in a transaction by agreement on February 5, 2004 (EBS/03/179, 12/30/03).
Decision No. 13167-(04/2)
Adopted January 8, 2004
Cooperation with Investigations on Fund Activities by Auditing Institutions of Members–Procedures
The Executive Board approves the procedures set forth in SM/04/7, 1/12/04.
Decision No. 13172-(04/6)
Adopted January 20, 2004
Eleventh General Review of Quotas–Period for Consent to Increases–Extension
Pursuant to Paragraph 4 of the Resolution of the Board of Governors No. 53-2,3 “Increase in Quotas of Fund Members-Eleventh General Review,” the Executive Board decides that notices of consent from members to increases in their quotas must be received in the Fund by 6:00 p.m., Washington time, on July 31, 2004 (EBD/04/6,½1/04).
Decision No. 13181-(04/10)
Adopted January 28, 2004
Framework Administered Account for Technical Assistance Activities–Canadian Technical Assistance Subaccount
In accordance with the terms and conditions of the Instrument establishing the Framework Administered Account for Technical Assistance Activities (Decision No. 10942-(95/33)),4 as amended, the Fund hereby approves the establishment of the “Canadian Technical Assistance Subaccount,” which shall be used by the Fund to administer resources to be contributed by the Government of Canada, as described in EBS/04/7 (EBS/04/7, 1/21/04).
Decision No. 13182-(04/10)
Adopted January 28, 2004
Strengthening the Effectiveness of Article VIII, Section 5
1. Pursuant to Article VIII, Section 5, the Fund decides that all members shall provide the information listed in Annex A to this decision, which is necessary for the Fund to discharge its duties effectively. Members shall provide the data specified in Annex A for the periods commencing after December 31, 2004. Annex A shall be reviewed no later than December 31, 2007.
2. When a member fails to provide information to the Fund as specified in Article VIII, Section 5 or in a decision of the Fund adopted pursuant to that Article including information listed in Annex A (hereinafter “information required under Article VIII, Section 5”), the procedural framework set forth in paragraphs 5 through 17 below shall apply. Failure to provide information includes both the nonprovision of information and the provision of inaccurate information.
3. A member has an obligation to provide information required under Article VIII, Section 5 to the best of its ability. Therefore, there is no breach of obligation if the member is unable to provide information required under Article VIII, Section 5 or to provide more accurate information than the information it has provided. However, a member that is unable to provide final data is obligated to provide provisional data to the best of its ability until it is in a position to provide the Fund with final data. When assessing a member’s ability to provide information, the Fund will give the member the benefit of any doubt.
4. In the context of performance criteria associated with the use of the Fund’s general resources, a member may be found in breach of its obligation under Article VIII, Section 5 only if (i) it has reported that a performance criterion was met when in fact it was not, or that a performance criterion was not observed by a particular margin and it is subsequently discovered that the margin of non-observance was greater than originally reported; and (ii) a purchase was made on the basis of the information provided by the member, or the information was reported to the Executive Board in the context of a review that was subsequently completed or of a decision of the Executive Board to grant a waiver for non-observance of the relevant performance criterion.
Procedures Prior to Report by the Managing Director to the Executive Board
5. Whenever it appears to the Managing Director that a member is not providing information required under Article VIII, Section 5 the Managing Director shall call upon the member to provide the required information; before making a formal representation to the member, the Managing Director shall inform, and enlist the cooperation of, the Executive Director for the member. If the member persists in not providing such information and has not demonstrated to the satisfaction of the Managing Director that it is unable to provide such information, the Managing Director shall notify the member of his intention to make a report to the Executive Board under Rule K-1 for breach of obligation unless, within a specified period of not less than a month, such information is provided or the member demonstrates to his satisfaction that it is unable to provide such information.
6. Whenever it appears to the Managing Director that a member has provided inaccurate data on information required under Article VIII, Section 5 the Managing Director shall consult with the member to assess whether the inaccuracy is due to a lack of capacity on the part of the member. If, after consulting with the member, the Managing Director finds no reason to believe that the inaccuracy is due to a lack of capacity on the part of the member, he shall notify the member of his intention to make a report to the Executive Board for breach of obligation under Rule K-1 unless the member demonstrates to his satisfaction within a period of not less than one month that it was unable to provide more accurate information.
7. If the Managing Director concludes that the nonprovision of information or the provision of inaccurate information is due to the member’s inability to provide the required information in a timely and accurate fashion, he may so inform the Executive Board. In that case, the Executive Board may decide to apply the provisions of paragraph 10 below.
Report by the Managing Director
8. After the expiration of the period specified in the Managing Director’s notification to the member, the Managing Director shall make a report to the Executive Board under Rule K-1 for breach of obligation, unless the Managing Director is satisfied that the member’s response meets the requirements specified in his notification. The report shall identify the nature of the breach and include the member’s response (if any) to the Managing Director’s notification, and may recommend the type of remedial actions to be taken by the member.
Consideration of the Report
9. Within 90 days of the issuance of the Managing Director’s report, the Executive Board will consider the report with a view to deciding whether the member has breached its obligations. Before reaching a decision, the Executive Board may request from the staff and the authorities additional clarification of the facts respecting the alleged breach of obligation; the Executive Board will specify a deadline for the provision of such clarification.
10. If the Executive Board finds that the member’s failure to provide information required under Article VIII, Section 5 is due to its inability to provide the information in a timely and accurate fashion, the Executive Board may call upon the member to strengthen its capacity to provide the required information and ask the Managing Director to report periodically on progress made by the member in that respect. The member may request technical assistance from the Fund.
11. (a) If the Executive Board finds that the member has breached its obligation, the Executive Board may call upon the member to prevent the recurrence of such a breach in the future and to take specific measures to that effect. Such measures may include the implementation of improvements in the member’s statistical systems or any other measures deemed appropriate in view of the circumstances.
(b) In addition, if the Executive Board finds that the member is still not providing the required information, the Executive Board will call upon the member to provide such information.
(c) The Executive Board will specify a deadline for taking any remedial actions specified under (a) and (b); in principle, the deadline will not exceed 90 days for actions specified under (b). The decision may note the intention of the Managing Director to recommend the issuance of a declaration of censure if the specified actions are not implemented within the specified period. In order to assist the Executive Board in identifying the appropriate actions to address a breach of obligation under Article VIII, Section 5 the member may, before the Board meeting, provide the Executive Board with a statement specifying the remedial actions it intends to take and a proposed time frame. The member may also request technical assistance from the Fund.
(d) At the expiration of the period specified by the Executive Board, the Managing Director shall report to the Executive Board on the status of the specified actions. If the member has not taken the specified actions within the specified period, and depending on the circumstances of such failure, the Managing Director may recommend and the Executive Board may decide (i) to extend the period before further steps under the procedural framework are taken; (ii) to call upon the member to take additional remedial actions within a specified time frame; or (iii) to issue a declaration of censure against the member.
Declaration of Censure
12. If a member fails to implement the actions specified by the Executive Board before the established deadline, the Managing Director may recommend and the Executive Board may decide to issue a declaration of censure. Before the adoption of a declaration of censure, the Executive Board may issue a statement to the member setting out its concerns and giving the member a specified period to respond.
13. The declaration of censure will identify the breach of obligation under Article VIII, Section 5 and the specified remedial actions the member has failed to take within the specified time frame. The declaration may specify a new deadline for the implementation by the member of the specified remedial actions; in addition, the declaration may identify further remedial actions for the member to implement before the specified deadline. It will note that the member’s failure to implement any of the actions called for in the declaration within the specified time frame may result in the issuance of a complaint for ineligibility under Article XXVI (a) and the imposition of this measure. At the expiration of the period specified by the Executive Board, the Managing Director shall report to the Executive Board on the status of the specified actions.
Sanctions Under Article XXVI
14. Following the adoption of a declaration of censure, if the Executive Board finds that the member has failed to implement any of the actions called for in the declaration within the specified time frame, the Managing Director may issue a complaint to the Executive Board and recommend that the Executive Board declare the member ineligible to use the general resources of the Fund for its breach of obligation under Article VIII, Section 5. The Executive Board decision declaring the member ineligible to use the general resources of the Fund will note that the member’s persistence in its failure to fulfill its obligations under Article VIII, Section 5 following the declaration of ineligibility may result in the issuance of a complaint for the suspension of the member’s voting and related rights and in the imposition of this measure.
15. If the member persists in its failure to fulfill its obligations under Article VIII, Section 5 for six months after the declaration of ineligibility, the Managing Director may issue a complaint and recommend that the Fund suspend the member’s voting and related rights. The Executive Board decision suspending the member’s voting and related rights will note that the member’s persistence in its failure to fulfill its obligations under Article VIII, Section 5 following the declaration of suspension of voting and related rights may result in the issuance of a complaint for compulsory withdrawal and in the initiation of the proceedings for the compulsory withdrawal of the member from the Fund.
16. If the member persists in its failure to fulfill its obligation under Article VIII, Section 5 for six months after the suspension of its voting rights, the Managing Director may initiate proceedings for the compulsory withdrawal of the member from the Fund.
17. All the Executive Board decisions arising from a breach of obligation taken under the procedures described above, including a decision to issue the statement of concern referred to in paragraph 12 above, will give rise to a public announcement with prior review of the text by the Executive Board.
The data referred to in paragraph 1 of this decision are the national data on the following matters:
(i) reserve, or base money;
(ii) broad money;
(iii) interest rates, both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds;
(iv) revenue, expenditure, balance and composition of financing (that is, foreign financing and domestic bank and nonbank financing) for the general and central governments respectively;5 the stocks of central government and central government-guaranteed debt, including currency and maturity composition and, if the debt data are amenable to classification on the basis of the residency or nonresidency of the holder, the extent to which the debt is held by residents or nonresidents;
(v) balance sheet of the central bank;
(vi) external current account balance;
(vii) exports and imports of goods and services;
(viii) the international reserve assets and reserves liabilities of the monetary authorities, specifying separately any reserve assets that are pledged or otherwise encumbered as well as net derivative positions;
(ix) gross domestic product or gross national product;
(x) consumer price index;
(xi) gross external debt;6 and
(xii) consolidated balance sheet of the banking system.
Decision No. 13183-(04/10)
Adopted January 30, 2004
Transparency and Fund Policies–Issues and Next Steps–Amendments to Decision
Publication Policies of the Fund
Authorization and Consent
1. The Managing Director shall arrange for publication by the Fund of the documents on the attached list, subject to the consent of the member concerned in the case of Documents 1-11, 13, and 16-17, and to the authorization of the World Bank in the case of Documents 6 and 11. For purposes of this decision (i) Documents 1-4, 6, 9, 10, 11, 13, and 17 will be referred to as “Country Documents”; (ii) Documents 5, 7-8, and 16 will be referred to as “Country Policy Intentions Documents”; and (iii) Documents 14 and 15 will be referred to as “Fund Policy Documents.”
2. The Executive Board encourages each member to consent, where required, to the publication by the Fund of a document under this decision. It is recognized that for some members such publication would be a longer-term objective.
3. (a) A member’s consent to Fund publication of Documents 5-11 and 13 shall be voluntary but presumed. From July 1, 2004, onwards, a member’s consent to Fund publication of Documents 1, 2, and 4 shall also be voluntary but presumed; until July 1, 2004, consent to the publication of these documents shall be voluntary. A member’s consent to Fund publication of Documents 3 and 16-17 shall be voluntary.
(b) The presumption referred to in paragraph 3(a) means that Fund publication of an applicable document would be expected to occur within 30 calendar days of the Executive Board meeting at which that document was considered. If, by the time of the relevant Executive Board meeting, the member concerned has not decided whether it will consent to the publication of the document, the Secretary will remind the member to communicate its publication decision to the Fund within 30 calendar days following the Executive Board meeting. Unless the member’s explicit consent is received by the Fund, Documents 1-11, 13, and 16-17 shall not be published.
4. (a) In the case of a member’s Poverty Reduction Strategy Paper (PRSP), Interim PRSP, or PRSP progress report (Document 5), the Managing Director will not recommend its endorsement by the Executive Board if the member concerned does not consent to its publication.
(b) From July 1, 2004, onwards, the Managing Director will generally not recommend that the Executive Board approve a request to use Fund resources that would result in the relevant member obtaining exceptional access to the Fund’s general resources, unless that member consents to the publication of the associated staff report. The use of Fund resources under an arrangement that was approved before July 1, 2004, shall not be affected by this policy, unless there is a change in the terms, conditions, or timing of the arrangement. For purposes of this paragraph (i) approval of the use of Fund resources includes the completion of a review under an arrangement; and (ii) “exceptional access” means access by a member to the Fund’s general resources, under any type of Fund financing, in excess of an annual limit of 100 percent of the member’s quota, or a cumulative limit (net of scheduled repurchases) of 300 percent of the member’s quota.
5. For the purposes of paragraph 1, a member’s actual consent shall normally be communicated to the Secretary of the Fund. Such consent may be communicated by the Executive Director elected, appointed, or designated by the member.
6. In respect of documents circulated to the Executive Board for which publication requires a member’s consent, the Secretary’s cover note will indicate whether a communication has been received from the member in this regard and, if so, the member’s intentions.
Member’s Statement Regarding Fund Staff Reports
7. If a Fund staff report (Documents 1, 9, and 17) on a member is to be published under this decision, the member concerned shall be given the opportunity to provide a statement regarding the staff report and the Executive Board assessment. Such statement shall be communicated to the Fund and published together with the staff report.
Deletions to Documents which Pertain to Members
8. Prior to publication of a Country Document, or a certain Country Policy Intentions Document (Documents 7-8) that has been the basis of a Fund decision, or Document 16 the member concerned may propose deletions to the Managing Director. In the case of a serious disagreement between the Managing Director and the member, the Managing Director or the Executive Director elected, appointed, or designated by that member may refer the matter to the Executive Board for its consideration. Deletions, if any, should be limited to highly market-sensitive material, mainly on exchange rates and interest rates, in banking and fiscal areas, and in vulnerability assessments. In particular, deletions will not apply to information in the public domain or politically sensitive information that is not highly market sensitive. In the case of Documents 1, 7-9, and 16-17, information relating to any performance criterion or structural benchmark may not be deleted unless the information is of such character that would have enabled it to be communicated to the Fund in a side letter pursuant to Decision No. 12067, adopted September 22, 1999. If, in a particular case, the Managing Director is of the view that the deletions would result in a document that, if published, would undermine the overall assessment and credibility of the Fund, the Managing Director may recommend to the Executive Board that the document not be published.
9. Deletions will not generally apply to a PRSP, an Interim PRSP, or a PRSP progress report that has been the basis of a Fund decision.
Chairman’s Statements in Respect of Use of Fund Resources
10. After the Executive Board adopts a decision regarding a member’s use of Fund resources (including a decision completing a review under a Fund arrangement) or completes a discussion on a member’s participation in the HIPC Initiative, PRSP, Interim PRSP or PRSP progress report, a Chairman’s statement on the discussion, emphasizing the key points made by Executive Directors, will be released to the public. Where relevant, the Chairman’s statement will contain a summary of HIPC Initiative decisions pertaining to the member and the Executive Board’s views on the member’s PRSP, Interim PRSP, or PRSP progress report. Waivers for nonobservance or of applicability of performance criteria, if any, will be mentioned in the press release containing the Chairman’s statement. Before the statement is released, it will be read by the Chairman to the Executive Board, and Executive Directors will have an opportunity to comment at that time. The Executive Director elected, appointed, or designated by the member concerned will have the opportunity to review the Chairman’s statement, to propose very minor revisions, if any, and to consent to its publication immediately after the Executive Board meeting. Notwithstanding the above, no Chairman’s Statement released under this paragraph shall contain any reference to a discussion or decision pertaining to (i) a member’s overdue financial obligations to the Fund, where a press release following an Executive Board decision to limit the member’s use of Fund resources because of the overdue financial obligations has not yet been issued; or (ii) a request to amend a repurchase expectation schedule pursuant to paragraph 1(b) of Decision No. 5703-(78/39)7 or paragraph 10(a) of Decision No. 4377-(74/114).8 In the case of an Executive Board meeting pertaining solely to a discussion or decision described in either (i) or (ii) above, no Chairman’s statement will be released.
Non-Publication of PINs and Chairman’s Statements in Selected Cases–Release by the Fund of Factual Statements in Lieu
11. (a) From July 1, 2004, onwards, if a member does not consent to the publication of a Public Information Notice (PIN) following the Executive Board’s conclusion of an Article IV consultation with that member, or following a post-program monitoring or ex post assessment discussion pertaining to that member (Document 13), a brief factual statement informing that the Executive Board has concluded that consultation or discussion will be released instead.
(b) If a member does not consent to the publication of a Chairman’s Statement (Document 10) under paragraph 10 where one would be applicable, a brief factual statement describing the Executive Board’s decision relating to that member’s use of Fund resources (including any information on waivers, HIPC initiative decisions, and endorsements of Documents 5) will be released instead.
Fund Policy Documents
12. After the Executive Board meets on policy issues, it shall be presumed, unless otherwise decided by the Executive Board, that the staff report considered at the meeting (Document 14) and/or a Public Information Notice (PIN, Document 15) on the discussion will be published. This presumption of publication shall not apply to Executive Board meetings on policy issues dealing with the administrative matters of the Fund, such as the Fund’s operating budget, personnel policies, staff retirement plan and asset management, for which the Executive Board may decide to publish Documents 14 and/or 15 on a case-by-case basis. In deciding to publish or not to publish Documents 14 and/or 15, the factors on which that decision shall be based shall include whether the discussions have reached completion or, if not completed, whether informing the public of the state of the discussions would be useful. The staff shall make a recommendation on the publication of a staff policy paper and/or a PIN on its cover. A PIN on policy discussions will be based on the decision that may have been adopted by the Executive Board or the Chairman’s summing-up of the discussions. It will also include a short section setting out background information.
13. (a) Prior to the publication of a Fund policy staff report, the Managing Director may make necessary factual corrections and deletions to the report (including of highly market-sensitive material and country-specific references). However, staff’s proposals in a report shall not be modified prior to its publication. In cases where confusion might arise from differences between staff’s proposals in the report and the Executive Board’s conclusions regarding those proposals as reflected in the PIN pertaining to the Executive Board discussion, it would be clearly indicated in the published version of the report which staff proposals the Executive Board did not endorse.
(b) Paragraph 13(a) shall not apply to the World Economic Outlook and Global Financial Stability Report. In accordance with established practice, staff may modify these documents prior to their publication in order to, inter alia, take into account views expressed at the relevant Executive Board meeting.
Timing and Means of Fund Publication
14. Documents may be published under this decision only after their consideration by the Executive Board, except for (i) PRSPs, Interim PRSPs, or PRSP progress reports; (ii) documents circulated to the Executive Board for information only; and (iii) Reports on Observance of Standards and Codes (ROSCs) and Assessment of Financial Sector Supervision and Regulation (AFSSR) reports. Documents under items (i)-(iii) may be published immediately after circulation to the Executive Board.
15. Publication by the Fund under this decision shall normally mean publication on its website but may include publication through other media.
Repeal of Superseded Decisions
16. The following decisions are repealed: (i) “Use of Fund Resources- Release of Chairman’s Statement,” Decision No. 11971-(99/58), adopted June 3, 1999; (ii) “Public Information Notices for Policy Matters,” Decision No. 11972-(99/58), adopted June 3, 1999; (iii) “Publication of Letters of Intent, Memoranda of Economic and Financial Policies and Policy Framework Papers,” Decision No. 11974-(99/58), adopted June 3, 1999; and (iv) “Release of Information-Reports on Recent Economic Developments and Statistical Appendices and Annexes,” Decision No. 10138-(94/61), adopted July 11, 1994. The decision set forth in EBD/98/64 (6/19/98), which was approved on a lapse-of-time basis on June 24, 1998, is repealed to the extent that it relates to the publication of the final decision and completion point documents under the HIPC Initiative.
Article XII, Section 8
17. Nothing in this decision shall be construed to be inconsistent with the power of the Fund to decide under Article XII, Section 8, by a 70 percent majority of the total voting power, to publish a report made to a member regarding its monetary or economic conditions and developments which directly tend to produce a serious disequilibrium in the international balance of payments of members.
18. In the case of a document pertaining to a country that is not a member of the Fund (i) all references to “member” in this decision shall be taken to mean “country”; and (ii) all references to “Executive Director elected, appointed, or designated by that member” shall be taken to refer to the appropriate authorities of the country concerned.
19. This decision shall be reviewed in light of experience at regular intervals not to exceed 24 months.
List of Documents Covered by the Decision
1. Surveillance and Supporting Documents
1. Article IV and Combined Article IV/Use of Fund Resources Staff Reports
2. Selected Issues Papers and Statistical Appendices
3. Reports on Observance of Standards and Codes (ROSCs), Financial Sector Stability Assessment (FSSA) reports, and Assessment of Financial Sector Supervision and Regulation (AFSSR) reports
4. Public Information Notices (PINs) following Article IV consultations and regional surveillance discussions
II. Use of Fund Resources by a Member
5. Poverty Reduction Strategy Papers (PRSPs), Interim PRSPs, and PRSP Progress Reports
6. Joint Fund/World Bank Staff Assessments of PRSPs, Interim PRSPs, and PRSP Progress Reports
7. Letters of Intent and Memoranda of Economic and Financial Policies (LOIs/MEFPs)
8. Technical Memoranda of Understanding (TMUs) with policy content
9. Use of Fund Resources, Post-Program Monitoring and Ex Post Assessment Staff Reports (excluding staff reports dealing solely with a member’s overdue financial obligations to the Fund)
10. Chairman’s Statements
11. Preliminary, decision point, and completion point documents under the HIPC Initiative
12. Statements on Fund decisions on waivers of applicability, or for nonobservance, of performance criteria
13. PINs following Executive Board discussions on post-program monitoring and ex post assessments
III. Fund Policy Documents
14. Fund policy issues papers
15. PINs following Executive Board discussions on policy issues
IV. Other Documents
16. LOIs/MEFPs for Staff Monitored Programs (SMPs)
17. Stand-alone Staff Reports on SMPs
Decision No. 13197-(04/16)
Adopted February 20, 2004
Trade-Related Balance of Payments Adjustments–Fund Support
1. The Fund is prepared to provide financial assistance to members that are experiencing balance of payment difficulties as a result of trade liberalization measures undertaken by other countries. Such assistance shall be made available (i) in the upper credit tranches under a Stand-By Arrangement, (ii) under the Extended Fund Facility, or (iii) under the Poverty Reduction and Growth Facility, and shall be subject to the general access limits established from time to time under such policies. Liberalization measures undertaken by other members would normally be limited to measures introduced either (i) under a WTO agreement or (ii) on a nondiscriminatory basis.
2. Financing under this decision may be provided to address the existing or anticipated balance of payments difficulties identified in paragraph 1 either at the time of the approval of an arrangement or completion of a program review under such an arrangement, upon the Fund’s determination that the member is implementing economic adjustment policies that are designed to address the identified balance of payments problems.
3. When making a request for financing under paragraph 2 above, the member may also request that the Fund indicate its willingness to consider providing additional financing if the balance of payments difficulties identified in paragraph 1 above that may arise during the course of the arrangement are larger than anticipated at the time of the approval of the original request under paragraph 2 above. This additional financing, which shall not exceed 10 percent of quota, may be requested by the member and be provided at any time during the period of the arrangement upon a determination by the Fund, in the context of a special review under the arrangement, that (i) the member’s adjustment program is broadly on track, and (ii) the additional financing is justified by unanticipated balance of payments difficulties of the type identified in paragraph 1.
4. Nothing in this decision shall be understood as preventing a member from requesting Fund financial assistance outside this decision to address the balance of payments problems identified in paragraph 1.
5. This decision shall be reviewed no later than April 30, 2007 (SM/04/63, Sup. 1, 4/1/04).
Decision No. 13229-(04/33)
Adopted April 2, 2004
PRGF-HIPC Trust Instrument–Amendment
The Executive Board approved the following decision, with one objection from Ms. Jacklin (US):
The Instrument to Establish a Trust for Special PRGF Operations for the Heavily Indebted Poor Countries and Interim PRGF Subsidy Operations (annexed to Decision No. 11436-(97/10),9 adopted February 4, 1997), as amended, shall be amended as follows:
The third sentence of Section III, Paragraph 3(e), shall be amended to read:
7. “The Trustee retains the right to commit additional assistance at the completion point, beyond that already committed, but only so as to bring the ratio of the net present value of debt-to-exports to 150 percent (or debt-to-fiscal revenue to 250 percent), if the deterioration in the member’s debt sustainability is primarily attributable to a fundamental change in the member’s economic circumstances due to exogenous factors” (EBS/04/43, 3/18/04).
Decision No. 13224-(04/33)
Adopted April 1, 2004
PRGF Trust and PRGF-HIPC Trust–Reserve Account–Review
Pursuant to Decision No. 10286-(93/23) ESAF,10 adopted on February 22, 1993, as amended, the Fund has reviewed the adequacy of balances in the Reserve Account of the PRGF Trust and determines that they are sufficient to meet all obligations that could give rise to payments from the Account to lenders to the Loan Account of the PRGF Trust in the six months from April 1, 2004 to September 30, 2004.
Decision No. 13226-(04/34) PRGF
Adopted April 5, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review–Disposition of Net Income for FY2004
1. The Fund’s net income for FY2004 derived from the application of paragraph 2 of Decision No. 12988-(03/36),11 adopted April 21, 2003, shall be placed in the Fund’s Special Reserve after the end of the financial year.
2. The expense derived from the application of International Accounting Standard 19-Employee Benefits during FY2004 shall be charged against the Fund’s Special Reserve and shall be recorded separately in the financial records of the Fund (EBS/04/55, 4/14/04).
Decision No. 13235-(04/42)
Adopted April 30, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review–Rate of Charge on Use of Fund Resources for FY2005
1. Notwithstanding Rule I-6(4)(a), effective May 1, 2004, the proportion of the rate of charge referred to in Rule 1-6(4) to the SDR interest rate under Rule T-1 shall be 154.0 percent.
2. The net income target for FY2005 shall be SDR 191 million. Any net income for financial year 2005 in excess of SDR 191 million shall be used to reduce retroactively the proportion of the rate of charge for financial year 2005. If net income for financial year 2005 is below SDR 191 million, the amount of projected net income for financial year 2006 shall be increased by the equivalent of that shortfall. For the purpose of this provision, net income shall be calculated without taking into account net operational income generated by the surcharges on purchases under the Supplemental Reserve Facility, the surcharge on purchases in the credit tranches and under the Extended Fund Facility or the effect on income of the implementation of International Accounting Standard 19-Employee Benefits (EBS/04/55, 4/14/04).
Decision No. 13236-(04/42)
Adopted April 30, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review–Burden Sharing Implementation in FY2005
Section I. Principles of Burden Sharing
1. The financial consequences for the Fund that stem from the existence of overdue financial obligations shall be shared between debtor and creditor member countries.
2. The sharing shall be applied in a simultaneous and symmetrical fashion (EBS/04/55, 4/14/04).
Section II. Determination of Rate of Charge
The rate of charge referred to in Rule 1-6(4) shall be adjusted in accordance with the provisions of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45), adopted April 28, 2000 (EBS/04/55, 4/14/04).
Section III. Adjustment for Deferred Charges
Notwithstanding paragraph 1(a) of Section IV of Executive Board Decision No. 12189-(00/45),12 adopted April 28, 2000, the rate of charge and the rate of remuneration determined under that Section shall be rounded to two decimal places (EBS/04/55, 4/14/04).
Section IV. Amount for Special Contingent Account-1
1. An amount of SDR 94 million shall be generated during financial year 2005 in accordance with the provisions of this Section and shall be placed to the Special Contingent Account-1 referred to in Decision No. 9471- (90/98),13 adopted June 20, 1990.
2. (a) In order to generate the amount to be placed to the Special Contingent Account-1 in accordance with paragraph 1 of this Section, notwithstanding Rule I-6(4)(a) and (b) and Rule 1-10, the rate of charge referred to in Rule 1-6(4) and, subject to the limitation in (b), the rate of remuneration prescribed in Rule I-10 shall be adjusted in accordance with the provisions of this paragraph.
(b) Notwithstanding paragraph 1 above, adjustments to the rate of charge and the rate of remuneration under this paragraph shall be rounded to two decimal places. No adjustment in the rate of remuneration under this paragraph shall be carried to the point where the average remuneration coefficient would be reduced below 85 percent for an adjustment period.
(c) The adjustments under this paragraph shall be made as of May 1, 2004, August 1, 2004, November 1, 2004, and February 1, 2005; shortly after July 31 for the period from May 1 to July 31; shortly after October 31 for the period from August 1 to October 31; shortly after January 31 for the period from November 1 to January 31; shortly after April 30 for the period from February 1 to April 30.
3. (a) Subject to paragraph 3 of Decision No. 8780-(88/12),14 adopted January 29, 1988, the balances held in the Special Contingent Account-1 shall be distributed in accordance with the provisions of this paragraph to members that have paid additional charges or have received reduced remuneration as a result of the adjustment when there are no outstanding overdue charges and repurchases, or at such earlier time as the Fund may decide.
(b) Distributions under (a) shall be made in proportion to the amounts that have been paid or have not been received by each member because of the respective adjustments.
(c) If a member that is entitled to a payment under this paragraph has any overdue obligation to the Fund in the General Department at the time of payment, the member’s claim under this paragraph shall be set off against the Fund’s claim in accordance with Decision No. 8271-(86/74),15 adopted April 30, 1986, or any subsequent decision of the Fund.
(d) Subject to paragraph 4 of Decision No. 8780-(88/12), adopted January 29, 1988, if any loss is charged against the Special Contingent Account-1, it shall be recorded in accordance with the principles of proportionality set forth in (b) (EBS/04/55, 4/14/04).
Section V. Review
The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit set forth in paragraph 2(b) of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45),16 adopted April 28, 2000 (EBS/04/55, 4/14/04).
Decision No. 13237-(04/42)
Adopted April 30, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review–Cost of Administering PRGF Trust
For financial year 2005, no reimbursement shall be made to the General Resources Account from the PRGF Trust Reserve Account for the cost of administering the PRGF Trust (EBS/04/55, 4/14/04).
Decision No. 13238-(04/42) PRGF
Adopted April 30, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review–Surcharges on Purchases Under Supplemental Reserve Facility, and in Credit Tranches and Under Extended Fund Facility-Disposition of Net Operating Income
For financial year 2005, after meeting the cost of administering the PRGF Trust, any remaining net operational income generated by the surcharges on purchases under the Supplemental Reserve Facility and the surcharges on purchases in the credit tranches and under the Extended Fund Facility shall be placed after the end of that financial year to the General Reserve (EBS/04/55, 4/14/04).
Decision No. 13239-(04/42) SRF
Adopted April 30, 2004
Income Position, Rate of Charge, and Burden Sharing for FY2004 and FY2005–Review of System of Special Charges
The Fund has reviewed the system of special charges applicable to overdue obligations to the General Resources Account, the Structural Adjustment Facility, and the Trust Fund (EBS/04/55, 4/14/04).
Decision No. 13240-(04/42) G/SAF/TR
Adopted April 30, 2004
Selected Decisions and Selected Documents of the International Monetary Fund, Twenty-Eighth Issue (December 31, 2003), p. 157.
Ibid., p. 157.
Ibid., p. 752.
Ibid., p. 157.
The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments.
Gross external debt is the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy (SM/03/386, Sup. 1, 1/23/04).
Ibid., p. 387.
Ibid., p. 269.
Ibid., p. 105.
Ibid., p. 441.
Ibid., p. 416.
Ibid., p. 404.
Selected Decisions and Selected Documents of the International Monetary Fund, Twenty-Seventh Issue (December 31, 2002), p. 390.
Selected Decisions and Selected Documents of the International Monetary Fund, Twenty-Sixth Issue (December 31, 2001), p. 319.
Selected Decisions, Twenty-Eighth Issue, December 2003, p. 398.
Ibid., p. 404.
A mid signs of a strengthening global economic recovery, close cooperation between the IMF and other international organizations continued to be of critical importance in FY2004. In an increasingly integrated financial system, identifying risks and generating sustained and widespread momentum for economic growth requires a high level of collaboration between 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, while the Fund maintains technical assistance centers in Africa, Asia, and the Caribbean, and runs or contributes to regional training institutes in Europe, Africa, and Asia.
Following the reorganization of the Fund’s permanent presence in Europe in FY2003, in which a Brussels Office was added to the existing Paris and Geneva Offices, the Paris Office remains the center of the Fund’s European operations, with the Director of the Paris Office being also the Director of the Offices in Europe. The Paris Office liaises with regional and international institutions located in Europe and contributes to the Fund’s European operations, focusing on multilateral and regional surveillance. Paris Office staff represent the Fund at donor and surveillance committees of the OECD, provide secretariat services to the Group of 10 (G-10), and keep close contact with the BIS in Basel. They also 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 primary purpose of the Brussels Office is to contribute to the surveillance of the European Union and the euro area and enhance cooperation with EU institutions. This involves the participation in Fund consultations with EU institutions in Brussels and Frankfurt, ongoing information gathering, and regular contacts with EU officials.
The Office in Geneva monitors, analyzes, and reports on the activities of Geneva-based socioeconomic agencies, with particular emphasis on the multilateral trading system and trade-related developments in the European Union. These agencies 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 (UNECE), and the Inter-Parliamentary Union (IPU).
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 Asia. The Office works closely with regional groupings such as the Asia-Pacific Economic Cooperation (APEC), the Association of South East Asian Nations (ASEAN), the Pacific Islands Forum (Forum), the South Asian Association for Regional Cooperation (SAARC), the South East Asian Central Banks (SEACEN), and the Executives’ Meeting of East Asia-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 (UNESCAP), 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 West African Regional Technical Assistance Center (West AFRITAC) opened in Bamako, Mali, on May 29, 2003, to strengthen locally based technical assistance and training in ten participating countries,1 furthering efforts by the IMF and the World Bank, in cooperation with donors, to build country ownership of poverty reduction efforts. The East AFRITAC was established in Tanzania in October 2002, and three more AFRITACs are planned for sub-Saharan Africa. Through the Pacific Financial Technical Assistance Center (PFTAC) and the Caribbean Regional Technical Assistance Center (CARTAC), the Fund provides similar technical assistance to its members in the Asia-Pacific region and in the Caribbean, respectively, that are seeking to improve their economic and fiscal management practices. 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 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 Agreement and in the joint 1989 Concordat, they play important complementary roles in ensuring the world’s economic growth and stability. Both institutions conduct regular consultations of senior staff members, participate in joint missions, attend joint meetings, and share documents. Collaboration by the staff, both on policy advice and on operational matters, is guided by the ongoing dialogue between IMF and Bank management.
As the mandates of the IMF and the World Bank have evolved, it has been necessary periodically to redefine the rules of engagement and the division of labor between the two organizations, with a view to enhancing their overall effectiveness. Building upon the sustained momentum since 2001 to strengthen the framework for Bank-Fund collaboration, the two institutions continued in FY2004 to review experience to date in implementing the guidance note on Operationalizing Bank-Fund Collaboration in Country Programs and Conditionality, issued in 2002. The guidance note forms the basis for collaboration between the area departments of the Fund and the regional departments of the Bank on country programs and conditionality. A subsequent review in September 2003 indicated broad satisfaction with the framework for Bank-Fund collaboration but also highlighted a number of areas for further improvement, including a consistent application of the division of labor between the two institutions with regard to conditionality, coordination in interacting with authorities, and shared work at the country level, for example, during joint missions.
The Fund and the 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. Reports on Observance of Standards and Codes (ROSCs) are a by-product of FSSAs. Much of the value added by the FSAP derives from its collaborative nature.
As of end-February 2004, 106 countries had participated or were participating in the FSAP, including a significant number of systemically or regionally important countries. A joint Fund-Bank FSAP review, considered by the Boards of the two institutions in March 2003, identified several common challenges: streamlining assessments to maintain a realistic pace, improving prioritization and selectivity, and ensuring systematic follow-up. A further joint Fund-Bank review is planned by 2005, and a joint research program relating to measures of financial sector development and deepening is currently under way.
The Fund and the Bank are also collaborating closely on a program to assess progress in member countries’ implementation and observance of standards and codes. The Fund has taken the lead on data and fiscal transparency; both institutions have assessed financial sector standards jointly as part of the FSAP; and the Bank has taken the lead in corporate governance, accounting and auditing, insolvency, and creditor rights. A joint Fund-Bank review is planned for 2005.
Given synergies with assessments of prudential supervisory standards, the FSAP provides a suitable context for undertaking assessments of countries’ anti-money-laundering (AML) and combating the financing of terrorism (CF) regimes. In 2002, the Financial Action Task Force (FATF) 40 + 8 Recommendations were added to the list of standards for which ROSCs are prepared, and a common AML/CFT methodology document developed by the Fund and the Bank was endorsed for use in both Fund-Bank-led ROSCs and those led by the FATF and FATF-style regional bodies. (See Section 2.) Since the Fund and the Bank initiated a twelve-month pilot program of AML/CFT assessments in October 2002 using the common methodology, 41 countries have been assessed, 33 by Fund and Bank experts. These assessments were conducted in all regions of the world and in both industrial and developing countries. In March 2004, the Executive Boards of the Fund and the Bank reviewed the pilot program and agreed to adopt a more comprehensive and integrated approach to conducting assessments of compliance with international standards for fighting money laundering and terrorist financing, building on the pilot program. Going forward, the Fund and the Bank both plan to carry out 10 money-laundering and terrorist-financing assessments a year as part of the FSAP (and, for the Fund, also as part of its offshore financial center assessments).
The two institutions also work jointly on global development issues. Together, the IMF and the World Bank have sought to relaunch the Doha Round of multilateral trade negotiations following the failure of discussions at the last ministerial meeting of the WTO in Cancun, Mexico, in September 2003. Following the World Bank-IMF Annual Meetings in Dubai in September 2003, IMF Managing Director Horst Köhler and World Bank President James Wolfensohn wrote jointly to heads of government, calling on world leaders not to allow the impasse at Cancun to undermine the commitments made in the Doha Development Agenda. As part of efforts within both institutions to help members adjust to the effects of trade liberalization, the IMF is preparing an initiative to support countries that experience temporary balance of payments shortfalls as a result of multilateral trade liberalization, while the Bank will support programs to improve trade logistics and competitiveness.
In April 2004, the staffs of the Fund and the Bank prepared the first annual Global Monitoring Report. This report assesses progress on policies and actions needed to achieve the Millennium Development Goals (MDGs) and considers the contributions of developing countries, developed countries, and the international financial institutions to the development partnership agreed at Monterrey in 2002. To strengthen the monitoring of progress toward the MDGs, Bank and Fund staff are collaborating on enhancing the Fund’s General Data Dissemination System (GDDS) to support the compilation of MDG indicators.
Finally, one of the most important areas of IMF-World Bank cooperation is their work toward the common objective of reducing poverty by stimulating economic growth and providing debt relief. Launched by the Bank and the Fund in 1996 and enhanced in 1999, the Heavily Indebted Poor Countries (HIPC) Initiative is a comprehensive approach to debt reduction for poor countries that entails coordinated action by the international financial community, including the multilateral institutions. Debt relief under the HIPC Initiative is approved and disbursed based on a recipient country’s continued effort toward macroeconomic adjustment and structural and social reforms. Some of the resources freed up by debt relief are expected to be used to finance social programs-primarily basic health care and education. All countries requesting debt relief under the HIPC Initiative must prepare a Poverty Reduction Strategy Paper (PRSP) through a broad-based participatory process. Fund and Bank staff work together in evaluating PRSPs and Interim Poverty Reduction Strategy Papers (IPRSPs). The staffs of both institutions prepare Joint Staff Assessments (JSAs) of the PRSPs, which are referred to the Executive Boards of both institutions for decision. During FY2004, 28 JSAs were completed by Fund and Bank staff.
Relations with the United Nations
The IMF works closely with the United Nations through the Special Representative of the Fund to the UN and through other extensive institutional contacts. The mandate of the Special Representative, who operates out of the Fund 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 two institutions.
During FY2004, collaboration between the IMF and the UN continued to focus on the challenges of financing development around the world and implementing the commitments of the Monterrey Consensus. In the follow-up to the International Conference on Financing for Development held in Monterrey, Mexico, in March 2002, the Fund participated in the first UN General Assembly High-Level Dialogue on Financing for Development, held in New York on October 29-30, 2003. In his remarks to the plenary, IMF Managing Director Horst Köhler reaffirmed that the Fund would continue to play its role in implementing the Monterrey Consensus-helping low-income countries establish a framework for sound macroeconomic policies and institutions—especially by streamlining conditionality; strengthening the alignment between the PRSP, national budget frameworks and the PRGF; and reinforcing technical assistance. Mr. Köhler also noted that the Monterrey Consensus extended beyond poverty alleviation to embrace building a stronger international financial system that helps all countries seize the benefits of globalization.
On March 23, 2004, a delegation of United Nations Economic and Social Council (ECOSOC) ambassadors met in a preparatory session with members of the Fund’s Executive Board, management, and senior staff to discuss the themes of the upcoming seventh annual high-level meeting of ECOSOC with the Bretton Woods institutions. Participants at the preparatory session emphasized that cooperation between the IMF and ECOSOC-and the United Nations more broadly-should continue to be pragmatic and mutually supportive, with each institution focusing its energies on its own mandate and area of expertise. Deputy Managing Director Agustín Carstens subsequently attended the high-level meeting, held in New York on April 26, 2004, which also involved the World Bank, the WTO, and representatives from other agencies and civil society.
Liaison with Other Intergovernmental Groups
On October 27-28, 2003, the IMF’s Statistics Department and the Bank for International Settlements (BIS) hosted a two-day conference-the first of its kind at the international level—for officials and analysts from central banks, statistical institutes, international institutions, academia, and the private sector. The conference was designed as a forum for exchanging ideas and building consensus on the development of reliable real estate indicators. The IMF’s own work on financial soundness indicators has pointed to the need to improve real estate statistics, and the conference provided a useful forum for networking and collaboration between international and country institutions in taking this work forward.
As a member of the Financial Stability Forum (FSF), the IMF takes the lead on developing, organizing, and carrying out assessments of offshore financial centers’ adherence to international standards. IMF staff attended the tenth and eleventh meetings of the FSF held, respectively, on September 10, 2003, in Paris, and March 29-30, 2004, in Rome. Fund staff also attended the FSF’s third Latin American regional meeting in Santiago, Chile, on November 17-18, 2003. The Chairman of the FSF was an observer at the October 2003 and April 2004 meetings of the International Monetary and Financial Committee (IMFC).
Collaboration between the IMF and the 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 at WTO meetings and regularly attends formal meetings of most WTO bodies. In particular, the IMF participates 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. At the May 2003 meeting of the WTO General Council, the Fund’s Managing Director and the President of the World Bank shared their views with WTO national delegations on trade issues and coherence in the work of the three organizations.
As part of the Fund’s ongoing efforts to strengthen dialogue with national legislators, IMF staff also participated in a panel on the Bretton Woods institutions at the annual meeting of the Inter-Parliamentary Union in October 2003. Throughout FY2004, 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). The Managing Director attended the G-8 summit in Evian, France, on June 2-3, 2003, and the meetings of the G-7 ministers and central bank governors, in Deauville, France, on May 16-17, 2003, and in Boca Raton, Florida, on February 7, 2004. First Deputy Managing Director Anne O. Krueger attended the Annual Meeting of the G-20 finance ministers and central bank governors on October 25-26, 2003, in Morelia, Mexico.
Cooperation with Regional Development Banks
Whether working to prevent crisis, 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 staff visits. In conjunction with the Asian Development Bank (AsDB), the European Central Bank (ECB), the World Bank, and other donor organizations, the Fund cosponsored the conference for the Commonwealth of Independent States (CIS-7), held in Bishkek, Kyrgyz Republic, on May 10-13, 2003, to celebrate the tenth anniversary of the Kyrgyz Republic’s national currency and to highlight economic progress in the CIS countries.
The IMF also worked with the AsDB to review and exchange experiences on the development of poverty reduction strategies in East Asian countries by cosponsoring, with the World Bank and the United Nations Development Program (UNDP), the forum of the Second East Asia and Pacific Regional Conference on Poverty Reduction Strategies, which was convened in Phnom Penh, Cambodia, on October 16-18, 2003. (See Section 4, Box 4.2.)
Role of IMF Management
In a globalized world, close cooperation between financial, trade, and development organizations is essential. Efforts to prevent crisis and to promote growth depend on 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. (See Section 8 for a description of the changes that occurred in the Fund’s senior management team during FY2004.)
In early July 2003, Managing Director Horst Köhler made his sixth visit to Africa since assuming office in May 2000. He met with senior government officials in Ethiopia, Kenya, Madagascar, and Mozambique. In a keynote address delivered at the Head of African States Meeting held in Maputo, Mozambique, on July 10, 2003, Mr. Köhler noted that achieving the ambitious Millennium Development Goal of halving poverty by 2015 required effort on all sides: creating domestic conditions for growth through sound national policies, and ensuring that the international community is supportive of Africa’s integration in the global economy. Over the long term, the IMF will further tailor its assistance to the challenges that Africa faces, helping countries in the region build stronger, more diversified financial sectors that will enable them to mobilize domestic investment, attract foreign direct investment, and pave the way for greater access to foreign capital markets. Also in July 2003, Mr. Köhler attended the Central American Conference in San Salvador. In his remarks at a working luncheon of the APEC meetings in Phuket, Thailand, on September 4, 2003, he stressed the importance of strengthening growth through regional and global economic cooperation.
On October 24, 2003, the Managing Director attended the Madrid Donors’ Conference on Reconstruction in Iraq. He reaffirmed the Fund’s readiness to play its part in international efforts to rebuild that country, noting that the Fund had been engaged in the reconstruction effort from the outset, as well as in efforts to boost stability and prosperity in the Middle East as a whole. Later that month, he attended the “East-West Conference on the Economic Potential of a Larger Europe” in Vienna, Austria, expressing confidence that European enlargement held tremendous promise for both the established and the new members of the European Union, and noting that the IMF’s role, especially in terms of its ongoing surveillance and its work on transparency and international codes, was evolving in tandem with Europe’s further economic integration. On January 12, 2004, Mr. Köhler attended the Special Summit of the Americas in Monterrey, Mexico, where he reaffirmed the IMF’s commitment to assisting countries in Latin America to build a better future for their people, noting that IMF financial support for the region had reached unprecedented levels and that the IMF was providing assistance to many emerging market members facing severe external difficulties.
The IMF’s Deputy Managing Directors also attended many conferences, meetings, and seminars throughout the year. In May 2003, First Deputy Managing Director Anne O. Krueger attended a meeting of Turkey’s Banking Regulation and Supervision Agency and participated in a forum, “Establishing a Future: Marching Towards 2023.” Both events took place in Istanbul. In December 2003, she presented a speech at the African Economic Research Consortium and participated in several workshop discussions. In her keynote address at the Malaysia Institute of Economic Research’s National Economic Outlook 2004 Conference, held in December 2003, the First Deputy Managing Director commented on some of the lessons learned from the financial crises of the 1990s in the context of the conference’s theme of “Developing a Dynamic Capital Market.” On January 21-25, 2004, Ms. Krueger attended the World Economic Forum’s Annual Meeting in Davos, Switzerland.
In November 2003, Deputy Managing Director Shigemitsu Sugisaki participated in the Asian Development Bank’s Second Ministerial Conference on Central Asia Economic Cooperation, which was held in Tashkent, Uzbekistan. Deputy Managing Director Eduardo Aninat delivered the keynote address at the opening of the West AFRITAC on May 29, 2003. In March 2004, Mr. Aninat’s successor, Deputy Managing Director Agustin Carstens, spoke at the Sixth Annual Meeting of Latin American Bank Chief Executives, in Santiago, Chile. He also attended the Inter-American Development Bank’s Annual Meeting in Lima, Peru, during which he presented a paper, “Banking Crises in Latin America and the Political Economy of Financial Sector Policy.” Mr. Carstens also participated in the International Donors’ Conference on Afghanistan held in Berlin on March 30-31, 2004.
Benin, Burkina Faso, Cote d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo.
In FY2004, the IMF continued to carry out a coordinated external communications strategy, in line with the Executive Board’s discussion in March 2003.1 The strategy focuses on two-way communication with groups and individuals through nonofficial channels, ensuring that the IMF learned from its interlocutors as it continued to assess and reform its policies and operations. The strategy also encompasses work on improving the public’s understanding of and support for the Fund and its activities. (For a description of the IMF’s transparency policy, see Section 6.) The IMF’s main external communications activities are described below.
Public Statements and Publications
In accordance with the IMF’s transparency policy, a large number of policy and country papers and summaries of Board discussions were released during FY2004. The Fund’s external website (www.imf.org) continued to be the primary vehicle for dissemination. During the year, an average of 120 items a month were added to the What’s New section of the website.
The external website was redesigned during FY2004 to better meet user needs. Both the World Economic Outlook database and the email notification system were enhanced. During the past financial year, over 8 million e-mails were sent to subscribers, who now have the option of receiving country-specific documents in addition to documents from a given series.
Following the Executive Board’s March 2003 review of the IMF’s external communications strategy, the Fund undertook a pilot project to increase the publication on the external website of selected types of Fund documents in languages other than English, when translations are available and a request for publication has been received. This pilot has been extended for further assessment.
The Executive Board’s weekly calendar is now available on the website, as are ex post assessments of country programs (which are part of the IMF’s country report series).
Speeches and other public appearances by management and senior staff conveyed the IMF’s views on broad policy and economic issues ranging from IMF reform to the outlook for the world economy, and on specific country and regional issues. The IMF posted most speeches on the website within hours of delivery.
Publication of economic and financial research and policy analysis papers included two issues of the World Economic Outlook; two issues of the Global Financial Stability Report; the quarterly journal IMF Staff Papers; the quarterly magazine Finance & Development; the biweekly newsletter IMF Survey; and a wide array of books, manuals and guides, Occasional Papers, Working Papers, Policy Discussion Papers, pamphlets, and leaflets (see Table V.1).
|Reports and Other Documents|
|Annual Report of the Executive Board for the Financial Year Ended April 30, 2003* (Chinese, English, French, German, and Spanish).|
|Annual Report on Exchange Arrangements and Exchange Restrictions, 2003 $110; $55 to full-time university faculty members and students.|
|Summary Proceedings of the Fifty-Sixth Meeting of the Board of Governors (2002).*|
|The IMF Committee on Balance of Payments Statistics, Annual Report, 2003.*|
|Selected Decisions and Selected Documents of the International Monetary Fund, 28th edition.|
|IMF Financial Statements, quarters ended April 30, 2003; October 31, 2003; January 31, 2004.|
|Balance of Payments Statistics Yearbook|
|Vol. 54, 2003. A two-part yearbook. $98 a year.|
|Direction of Trade Statistics|
|Quarterly, with yearbook. $155 a year; $129 to full-time university faculty members and students. $70 for yearbook only.|
|Finance and Development*|
|Quarterly (Arabic, Chinese, English, French, and Spanish). Free by subscription.|
|Airspeed delivery, $20. Individual copies, $10.|
|Government Finance Statistics Yearbook|
|Vol. 27, 2003 (Introduction and titles of lines in English, French, and Spanish). $80.|
|IMF Research Bulletin*|
|IMF Staff Papers*|
|Three times a year. $72 a year; $46 to full-time university faculty members and students.|
|IMF Staff Papers: Special Issue of the Proceedings of the Third Annual Research Conference (Vol. 50, 2002). $18.|
|Twice monthly, once in December (English, French, and Spanish). Private firms and individuals are charged an annual rate of $109. Vol. 33-2003 (English), Vol. 33-2003 (French), and Vol. 33-2003 (Spanish).|
|International Financial Statistics|
|Monthly, with yearbook. $495 a year; $247 to full-time university faculty members and students. $95 for yearbook only; $65 for monthly issues. International Financial Statistics is also available on CD-ROM and on the Internet at www.imf.statistics.org; price information is available on request.|
|No. 218. Fiscal Vulnerability and Financial Crises in Emerging Market Economies, by Richard Hemming, Michael S. Kell, and Axel Schimmelpfennig. 2003.|
|No. 219. Economic Policy in a Highly Dollarized Economy: The Case of Cambodia, by Mario de Zamaroczy and Sopanha Sa. 2003.|
|No. 220. Effects of Financial Globalization on Developing Countries: Some Empirical Evidence, by Eswar S. Prasad, Kenneth Rogoff, Shang-Jin Wei, and Ayhan Kose. 2003.|
|No. 221. Deflation: Determinants, Risks, and Policy Options, by Manmohan S. Kumar, Taimur Baig, Jorg Decressin, Chris Faulkner-MacDonagh, and Tarhan Feyzioglu. 2003.|
|No. 222. Informal Funds Transfer Systems: An Analysis of the Informal Hawala System, by Mohammed El Qorchi, Samuel Munzele Maimbo, and John F. Wilson. 2003.|
|No. 223. Monetary Union Among Member Countries of the Gulf Cooperation Council, by a staff team led by Ugo Fasano. 2003.|
|No. 224. Managing Systemic Banking Crises, by a staff team led by David S. Hoelscher and Marc Quintyn. 2003.|
|No. 225. Rules-Based Fiscal Policy in France, Germany, Italy, and Spain, by Teresa Daban, Enrica Detragiache, Gabriel di Bella, Gian Maria Milesi-Ferretti, and Steven Symansky. 2003.|
|No. 226. Hong Kong SAR: Meeting the Challenges of Integration with the Mainland, edited by Eswar Prasad, with contributions from Jorge Chan-Lau, Dora lakova, William Lee, Hong Liang, Ida Liu, Papa N’Diaye, and Tao Wang. 2004.|
|No. 227. U.S. Fiscal Policies and Priorities for Long-Run Sustainability, edited by Martin Muhleisen and Christopher Towe, 2004.|
|No. 228. Capital Markets and Financial Intermediation in The Baltics, by Alfred Schipke, Christian Beddies, Susan M. George, and Niamh Sheridan. 2004.|
|Recent Occasional Papers are available for $25 each, $22 for full-time university faculty members and students.|
|World Economic and Financial Surveys|
|World Economic Outlook*|
|A survey by the staff of the International Monetary Fund.|
|Twice a year (April and September) (Arabic, English, French, and Spanish).|
|$49; $46 for full-time university faculty members and students.|
|Global Financial Stability Report, September 2003, April 2004.|
|$49; $46 for full-time university faculty members and students.|
|Emerging Local Securities and Derivatives Markets: Recent Developments and Policy Issues|
|$49; $46 for full-time university faculty members and students.|
|Official Financing: Recent Developments and Selected Issues, by a staff team led by Martin G. Gilman and Jian-Ye Wang.|
|$42; $35 for full-time university faculty members and students.|
|Books and Seminar Volumes|
|Challenges to Central Banking from Globalized Financial Systems, edited by Piero C. Ugolini, Andrea Schaechter, and Mark R. Stone. $40.|
|Changing Customs: Challenges and Strategies for the Reform of Customs Administration, edited by Michael Keen. $25.|
|Current Developments in Monetary and Financial Law, Vol. 2. $65.|
|Fiscal Policy Formulation and Implementation in Oil-Producing Countries, by Jeffrey M. Davis, Rolando J. Ossowski, and Annalisa Fedelino. $37.|
|Lifting the Oil Curse: Improving Petroleum Revenue Management in Sub-Saharan Africa, by Menachem Katz, Ulrich Bartsch, Harinder Malothra, and Milan Cuc. $20.|
|The Low-Income Countries of the Commonwealth of Independent States: Progress and Challenges in Transition, edited by Clinton R. Shiells and Sarosh Sattar (with the World Bank). $36.|
|Managing Oil Wealth: The Case of Azerbaijan, by John Wakeman-Linn, Chonira Aturupane, Stephan Danninger, Koba Gvenetadze, Niko Bobdari, and Eric Le Borgne. $20.|
|Russia Rebounds, edited by David Owen and David 0. Robinson. $28.|
|Who Will Pay? Coping with Aging Societies, Climate Change, and Other Long-Term Fiscal Challenges, by Peter S. Heller. $28.|
|Manuals and Guides|
|Balance of Payments Textbook (Arabic). $25.|
|External Debt Statistics Guide for Compilers and Users (English, French, Spanish). $60.|
|Foreign Direct Investment Statistics: How Countries Measure FDI (with OECD). $25.|
|Government Finance Statistics Manual 2001, by the Statistics Department (French, Russian). $40.|
|Guidelines for Public Debt Management: Accompanying Document and Selected Case Studies, by the staffs of the IMF and the World Bank. $31.|
|Quarterly National Accounts Manual: Concepts, Data Sources, and Compilation, by Adriaan Bloem, Robert J. Dippelsman, Nils O. Maehle (Russian). $40.|
|Suppressing the Financing of Terrorism: A Handbook for Legislative Drafting, by the IMF Legal Department (Arabic, English, French, Spanish, Russian*). $21.|
|Taxing the Financial Sector: Concepts, Issues, and Practices, edited by Howell H. Zee. $17.|
|Economic Issues Series*|
|No. 28. Moral Hazard: Does IMF Financing Encourage Imprudence by Borrowers and Lenders? by Timothy Lane and Steven Phillips (Arabic).|
|No. 29. The Pension Puzzle: Prerequisites and Policy Choices in Pension Design, by Nicholas Barr (Arabic).|
|No. 30. Hiding in the Shadows: The Growth of the Underground Economy, by Friedrich Schneider with Dominik Enste (Arabic, Chinese).|
|No. 31. Corporate Sector Restructuring: The Role of Government in Times of Crisis, by Mark R. Stone (Arabic, Chinese, French, Russian, and Spanish).|
|No. 32. Should Financial Regulators Be Independent? by Marc G. Quintyn and Michael W. Taylor (English).|
|No. 33. Educating Children in Poor Countries, by Arye L. Hillman and Eva Jenkner (English).|
|No. 53. Governance of the International Monetary Fund: Decision Making, Institutional Oversight, Transparency, and Accountability, by Leo Van Houtven (French).|
|Guide to the IMF Series*|
|IMF Technical Assistance: Transferring Knowledge and Best Practice (Arabic, Chinese, English, French, Russian, and Spanish).|
|What Is the International Monetary Fund? (Arabic, Bahasa Indonesian, and Thai).|
|Challenges of Growth and Globalization in the Middle East and North Africa, by George T. Abed and Hamid R. Davoodi (Arabic and English).|
|Choosing Exchange Regimes in the Middle East and North Africa, by Abdelali Jbili and Vitali Kramarenko (Arabic and English).|
|Creating Employment in the Middle East and North Africa, by Edward Gardner (Arabic and English).|
|Financial Development in the Middle East and North Africa, by Susan Creane, Rishi Goyal, A. Mushfiq Mobarak, and Randa Sab (Arabic and English).|
|GCC Countries: From Oil Dependence to Diversification, by Ugo Fasano and Zubair Iqbal (Arabic and English).|
|IMF Macroeconomic Research on Low-Income Countries (English).|
|The Middle East and North Africa in a Changing Oil Market, by Bright E. Okogu (Arabic and English).|
|Per Jacobsson Pamphlets: The Arab World: Performance and Prospects; and The Boom-Bust Capital Spending Cycle in the United States: Lessons Learned (English).|
|Independent Evaluation Office Reports|
|Independent Evaluation Office, Annual Report 2003.|
|The IMF and Recent Capital Account Crises: Indonesia, Korea, Brazil. Full Report $25. Abridged versions in English, Korean, and Portuguese.|
|Fiscal Adjustment in IMF-Supported Programs. Full Report $25. Abridged version in English.|
|Working Papers and Policy Discussion Papers*|
|IMF Working Papers and Policy Discussion Papers are designed to make IMF staff research available to a wider audience. They represent work in progress and reflect the views of the individual authors rather than those of the IMF.|
|Working Papers 03/92-252 and 04/1-73 were issued in FY2004. $15 each; $375 for annual subscription.|
|Policy Discussion Papers 03/3-03/6 and 04/1 were issued in FY2004. $10 each; annual subscription is included as part of the subscription to Working Papers.|
|IMF Country Reports provide comprehensive material on economic developments and trends in member countries, including key statistics.|
|Country Reports 03/121-402 and 04/1-119 were issued in FY2004. $15 each.|
To make the IMF’s technical and analytical work more accessible, the IMF published new titles in its Economic Issues, Issues Briefs, and Factsheets series. Economic Issues are brief, readable summaries of policy-related findings of economic research carried out by Fund staff. Issues Briefs discuss key issues facing the IMF and the global economy, while the Factsheets explain in plain language how the IMF works.
Press briefings by the Director of the External Relations Department were held at headquarters for Washington-based journalists, usually at two-week intervals. Transcripts and videos of the briefings were posted on the IMF’s website shortly afterwards.
Press releases on decisions taken by the Executive Board, and on activities and statements by management and senior staff, were distributed electronically directly to journalists worldwide and posted on the website. Over the course of the financial year, more than 300 press releases and other communications to the press were prepared and distributed.
A web page for journalists was created on the Fund’s external website shortly before the end of the financial year, offering links to information of particular interest to the media. The page also serves as a gateway to the password-protected Media Briefing Center, an online service giving journalists access to embargoed documents, press briefings, and other useful information.
To reach wider audiences in member countries, IMF management and senior staff expressed their views on issues of importance to the Fund through a variety of other media channels. For instance, the Fund responded to interview requests with management or senior staff in the print and broadcast media, and Fund authors also offered media articles, often called op-eds, on country-specific or topical policy issues.
Press conferences with management and senior staff, held on such occasions as the Spring and Annual Meetings and on the release of major reports such as the World Economic Outlook and the Global Financial Stability Report, were also made widely available to the public as transcripts and videos posted on the website.
Outreach to Civil Society
In October 2003, the Managing Director issued to all members of the IMF staff the Guide for Staff Relations with Civil Society Organizations, which was published on the IMF’s website shortly afterwards. The preparation of the Guide followed a proposal, welcomed by IMF Executive Directors, to offer guidance for staff outreach that would focus specifically on issues arising in interactions with civil society that influence the Fund’s operational work. Great care was taken to obtain a balanced spectrum of views. The Guide was drafted by an external expert and involved extensive consultation with civil society organizations (CSOs) and IMF staff.
The IMF continues to deepen its outreach to CSOs, including nongovernmental organizations, labor unions, faith-based organizations, business associations, and research institutes and other think tanks. IMF staff and management meet frequently with civil society representatives both at headquarters and in the Fund’s member countries. The Fund interacts with CSOs (1) at Fund headquarters on global policy issues; (2) in the context of Article IV consultations and program design, particularly in low-income countries preparing poverty reduction strategies; and (3) in the normal course of work with member countries, especially the work conducted by resident representatives.
The IMF’s quarterly Civil Society Newsletter is distributed electronically to subscribers and is posted on the IMF website. To ensure that it reaches as wide an audience as possible, including national organizations in member countries, it is translated into French, Spanish, and Russian.
Outreach to Legislators
FY2004 saw a substantial expansion in the IMF’s outreach to legislators. IMF staff held various in-country seminars-for example, in Lao P.D.R., Vietnam, and Russia-as well as regional seminars with legislators in South Asia, the Middle East and North Africa, and Southeastern Europe. The seminars provided an opportunity for IMF staff to hear the views of legislators and to explain IMF policy advice. IMF management and Executive Directors met with legislators on their visits to member countries, and the IMF hosted several visiting parliamentary delegations at its headquarters. In FY2004, the Working Group of Executive Directors on Enhancing Communication with National Legislators was established. It recommended that outreach should be expanded to help build understanding of the Fund’s work.
The IMF has expanded its collaboration with the Parliamentary Network on the World Bank. In February 2004, management participated in the group’s annual meeting, which provided yet another occasion for legislators to have a dialogue with the IMF. Fund staff are also collaborating with other umbrella groups, such as the Global Organization of Parliamentarians Against Corruption.
In September 2003, the IMF launched a new Book Forum series open to the public and designed to attract small, specialized groups interested in discussing books on topical economic issues. Book topics ranged from capitalism and globalization to IMF governance and the voice of developing countries in the IMF. The general public was also drawn to the Economic Forum series, which continued to provide an opportunity for informed discussion reflecting diverse points of view.
Outreach to academics, students, and the policy research community also continued to expand. In FY2004, some 180 briefings were given, along with the continuation of the biannual briefing to Washington-area think tanks to provide background on key issues surrounding the upcoming Spring and Annual Meetings. The IMF continues to be responsive to the general public, and in FY2004 the staff answered thousands of e-mails and written queries and commentaries on the work and policy advice of the IMF.
The IMF Center hosted nearly 17,000 visitors in FY2004. In addition to its web-based educational programs, such as “The IMF in Action” and “Trading Around the World,” the Center offered curriculums for elementary and high school groups. In FY2004, 375 elementary school students visited the Center to participate in lesson plans aimed at teaching them about international cooperation, currency, and trade. In addition to the permanent exhibit “Money Matters” on the history of global cooperation, the Center featured a new exhibit, “Money and Sovereignty,” developed in collaboration with the Smithsonian Institution, exploring the symbolic language of money from antiquity to the present. In conjunction with embassies, the Center organized and hosted cultural events that brought in new and large audiences.
The depth and variety of volunteer and philanthropic activities being pursued by the IMF reflects the commitment of the institution and its employees to “give back” to communities located both in the Washington, D.C., area and in member countries around the world. The IMF’s Civic Program and staff volunteers reach out to low-income communities at home and abroad through civic grants; volunteerism; donations to humanitarian relief efforts; the provision of space in the IMF headquarters building for community meetings, cultural events and fundraisers; and the donation of goods such as computers, furniture, clothing, and school supplies. The ultimate objective of all of the IMF’s outreach efforts is to help the recipients build a better future. In financial year 2004, direct IMF grants and staff donations to the IMF’s annual “Helping Hands” campaign and humanitarian relief campaigns totaled about $1 million. Since the inception of the Civic Program ten years ago, the IMF and its staff have contributed over $7 million to charities in the Washington, D.C., area and in developing countries. Information on the Civic Program is available on the external website.
The Board review of the external communications strategy is outlined at www.imf.org/external/np/sec/pn/2003/pn0333.htm.
International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund
Eighth Meeting, Dubai, United Arab Emirates, September 21, 2003
1. The International Monetary and Financial Committee held its eighth meeting in Dubai on September 21, 2003, under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom. The Committee expresses its gratitude to the Dubai authorities and the government of the United Arab Emirates for the excellent arrangements.
The Global Economy and Financial Markets
2. The Committee welcomes the increasing signs that economic activity is strengthening in many economies, and the improved prospects for a steady and strengthening global recovery going forward. The major uncertainties have lessened since we met last April. Nevertheless, risks remain in many countries and it is important that policymakers stand ready to take the necessary policy actions. The Committee underscores the importance of close international cooperation and determined action across the membership to foster a strong, sustainable, and broad-based economic recovery.
3. The Committee emphasizes that, as the recovery proceeds, all countries have an interest in seeing more balanced growth with orderly adjustment. Sustained and vigorous structural reforms in many areas, and domestic sources of growth, are important in this respect. The Committee agrees on the need for continued focus by the IMF on exchange rate issues across the membership.
4. The international community must urgently make progress on trade and development. Ministers reaffirm their full political commitment to a multilateral rules-based approach to trade liberalization, and to making substantial and concrete progress. Ministers were disappointed at the breakdown of trade negotiations in Cancun. Ministers urge a speedy resumption of the Doha Round, which is vital for strong global growth and our development objectives. This should focus on the issues of importance to all countries of open markets and fair access and the reduction of trade-distorting subsidies in all areas, notably in agriculture. The Committee reiterates the crucial importance of removing the obstacles and moving forward without delay, and calls on all countries to play their part. It stresses the importance of the IMF’s initiative to provide assistance to countries to help them address the transitional impact of trade reforms, which will contribute to the Doha Round.
5. In the advanced economies, monetary policy should continue to support demand in the context of low inflation, and the automatic fiscal stabilizers should be allowed to operate within credible medium-term frameworks to deliver fiscal consolidation. The vigorous pursuit of structural reforms and enhanced corporate governance and transparency are key to stronger, globally balanced growth. In the United States, where the fiscal stance has substantially supported activity, fiscal policy will need to focus on strengthening sustainability over the medium term. In Europe, progress in structural reforms should be accelerated and deepened both to strengthen work incentives, investment, and competition and to address the fiscal pressures of population aging. In Japan, continued efforts will be necessary to strengthen the banking and corporate sectors and end deflation, and to make a beginning toward fiscal consolidation over the medium term.
6. The improved financial market environment provides a valuable window of opportunity for emerging market economies to continue to pursue ambitious institutional and structural reforms which, together with sound macroeconomic policies, will enhance growth prospects and reduce vulnerabilities. While many countries have strengthened policies, key priorities remain to improve fiscal positions, strengthen banking and corporate sectors, reduce balance sheet vulnerabilities, and foster more broadly based growth. Growth in the Middle East and North Africa has picked up. However, the challenge facing the region will be to accelerate medium-term growth and absorb the rapidly growing labor force.
7. The Committee reaffirms its support for a multilateral effort to reconstruct and redevelop Iraq, and welcomes the constructive role being played by the IMF. It looks forward to the donors conference in Madrid next month based on a comprehensive needs assessment involving the World Bank and the IMF. The Committee supports the IMF providing, subject to its policies, financial and other assistance to Iraq.
8. Growth prospects in many low-income countries have strengthened, underpinned by improved macroeconomic policies and domestic reforms. However, significantly faster growth will be needed to reduce poverty and meet the Millennium Development Goals (MDGs) set out in the UN Millennium Declaration. This requires stronger policy frameworks and institutions, better governance, higher and more effective aid flows, and improved market access. African countries should continue to press forward with the region-wide implementation of the New Partnership for Africa’s Development (NEPAD), particularly to strengthen the foundations for investment and private sector-led growth.
Strengthening IMF Surveillance and Promoting International Financial Stability
9. Strengthened and effective IMF surveillance is essential to enhancing crisis prevention and promoting stability and sustainable global growth. The Committee welcomes the ongoing reforms to strengthen the framework for IMF surveillance, and underlines the importance of enhancing and implementing surveillance consistently and evenhandedly across the membership. The Committee also welcomes the increased focus of surveillance on capital markets, and encourages the IMF and the Financial Stability Forum working together to identify gaps and further strengthen assessments of systemic weaknesses in financial markets.
10. The Committee stresses the need for the IMF to continue to improve the quality, effectiveness, and persuasiveness of its surveillance. This will involve: sharpening surveillance, especially in systemically and regionally important countries; working to enhance the impact of IMF policy advice; and continuing efforts to bring fresh perspectives to assessments. The Committee looks forward to discussing progress in these areas following the Executive Board’s 2004 biennial review of surveillance.
11. The Committee emphasizes that it is particularly important that surveillance focus on identifying potential problems early and provide candid advice on policy reforms. In this respect, Committee members identified a number of key issues for the coming year, including making progress on structural reform and on medium-term sustainable fiscal frameworks; reducing balance sheet vulnerabilities, including currency mismatches, and improving debt sustainability; and encouraging policy measures to reduce global imbalances.
12. The Committee underscores the importance of increased transparency and candor of the IMF’s advice to members. It notes the Executive Board’s recent agreement on a policy of voluntary but presumed publication of IMF Article IV reports and program documents, and the enhanced provisions for exceptional access.
13. The Committee emphasizes its support for ways to achieve some of the objectives of the Contingent Credit Lines (CCL), intended to reduce vulnerabilities and provide precautionary support for members with strong policies in dealing with external financial developments. It looks forward to further work in this area.
14. The Committee welcomes the progress in strengthening the framework for crisis resolution, especially the inclusion by an increasing number of countries of collective action clauses (CACs) in their international sovereign bonds, and encourages their use on a voluntary basis by other countries. It also calls on the IMF to promote the voluntary inclusion of CACs. The Committee looks forward to the efforts led by sovereign debtors and private creditors to develop a voluntary Code of Conduct, and encourages the IMF to continue to contribute to this work. It looks forward to the ongoing work on issues of general relevance to the orderly resolution of financial crises, including transparency and disclosure, aggregation and intercreditor equity. The Committee looks forward to a report on progress at its next meeting.
Accelerating Poverty Reduction and Strengthening Sustainable Economic Growth in Low-Income Countries
15. The Committee stresses that the IMF has an important role to play in helping low-income countries achieve high and sustained growth and poverty reduction, in close cooperation with the World Bank. It agrees that this support should be firmly aligned behind Poverty Reduction Strategy Papers and that the Fund should work in its core areas of competence alongside the Bank in support of the Millennium Development Goals. The IMF needs to remain engaged with low-income countries over the long term through well-targeted technical assistance, capacity building, surveillance, and, when warranted, temporary financial assistance. The Committee looks forward to reviewing Bank-Fund collaboration in that area at its next meeting.
16. The Committee emphasizes the importance of initiatives to enhance the IMF’s support for low-income countries, including ensuring that macroeconomic policy frameworks support higher and sustained growth and poverty reduction; improving governance and strengthening institutions to support growth and private sector development; reducing vulnerability to shocks; and helping countries move beyond sustained reliance on IMF financial arrangements when ready. The Committee underscores the importance of technical assistance, and looks forward to work on adapting IMF instruments and reviewing PRGF financing. The Committee looks forward to a comprehensive review of progress at its next meeting.
17. The Committee emphasizes the urgent need to enhance market access and to increase the level and effectiveness of donor resources for low-income countries. In order to help achieve the Millennium Development Goals, the Committee calls upon the IMF to cooperate with the World Bank in work on aid effectiveness, absorptive capacity, and results-based measurement mechanisms, and in examining the merits of various policy options and financing mechanisms, such as an international financing facility, to mobilize the substantial additional resources that are needed over the medium term. Developing and emerging market countries should also be closely involved. The Committee looks forward to a report by the next Annual Meetings.
18. The Committee notes the progress in providing debt relief to the world’s poorest countries under the enhanced HIPC Initiative. It calls on the IMF, in collaboration with the World Bank, to develop strategies to help countries implement the necessary policies and reforms to reach decision and completion points as quickly as possible, and achieve a lasting exit from unsustainable debt. The Committee urges all creditors that have not yet done so to deliver debt relief in full and invites the IMF to report on the compliance of countries. It recognizes the importance of providing topping up as appropriate, and of the ongoing discussions on the topping-up methodology and the financial implications.
19. The Committee stresses that the IMF’s effectiveness as a cooperative institution depends on all members having an appropriate voice and representation. The Committee welcomes the measures being taken to improve the capacity of developing and transition countries to participate more effectively in IMF policy formulation and decision making. It welcomes the IMF Executive Board’s progress report on quotas, representation, and voice and asks the IMF to examine these issues further, and will review progress at its next meeting. The Committee recommends completion of the ratification of the Fourth Amendment.
20. The Committee welcomes the further actions taken by the international community to combat money laundering and the financing of terrorism, and the progress with the 12-month pilot program of AML/CFT assessments. The Committee is encouraged by the continued close cooperation among the IMF, the World Bank, the FATF, and FATF-style regional bodies, and increased country involvement, and supports the enhanced delivery of critically needed technical assistance. The Committee encourages all members to adopt AML/CFT laws and practices consistent with the agreed international standards, and looks forward to a full report at the conclusion of the pilot program.
21. The Committee welcomes the work of the Independent Evaluation Office, and its role in enhancing the learning culture, effectiveness, and accountability of the IMF. It emphasizes the importance of the IMF taking forward the work on prolonged use, capital account crises, and fiscal adjustment, in the light of the IEO’s recommendations.
22. The Committee expresses its appreciation of the work of Shigemitsu Sugisaki as Deputy Managing Director and Kenneth Rogoff as Economic Counsellor.
23. The next meeting of the IMFC will be held in Washington, D.C. on April 24, 2004.
International Monetary and Financial Committee Attendance
September 21, 2003
Members or Alternates
Ibrahim A. Al-Assaf, Minister of Finance, Saudi Arabia
Mervyn King, Governor, Bank of England, United Kingdom (Alternate for Gordon Brown, Chancellor of the Exchequer, United Kingdom)
Peter Costello, Treasurer of the Commonwealth of Australia
Job Graça, Deputy Minister of Finance, Angola (Alternate for Jose Pedro de Morais, Jr., Minister of Finance, Angola)
Rodrigo de Rato, First Vice President and Minister of Economy, Spain
Hans Eichel, Minister of Finance, Germany
Geir Hilmar Haarde, Minister of Finance, Iceland
Jamaludin Mohd Jarjis, Finance Minister II, Malaysia
Mohammed K. Khirbash, Minister of State for Finance and Industry, United Arab Emirates
Aleksei Kudrin, Deputy Chairman of the Government and Minister of Finance, Russian Federation
Mohammed Laksaci, Governor, Banque d’Algérie
Roberto Lavagna, Minister of Economy and Production, Argentina
John Manley, Minister of Finance, Canada
Jean-Claude Trichet, Governor, Banque de France (Alternate for Francis Mer, Minister of Economy, Finance and Industry, France)
Antonio Palocci, Minister of Finance, Brazil
Didier Reynders, Minister of Finance, Belgium
Toshihiko Fukui, Governor, Bank of Japan (Alternate for Masajuro Shiokawa, Minister of Finance, Japan)
Yaga V. Reddy, Governor, Reserve Bank of India (Alternate for Jaswant Singh, Minister of Finance and Company Affairs, India)
John W. Snow, Secretary of the Treasury, United States
Paul Toungui, Minister of State, Minister of Finance, Economy, Budget, and Privatization, Gabon
GiulioTremonti, Minister of Economy and Finance, Italy
Kaspar Villiger, Minister of Finance, Switzerland
Gerrit Zalm, Minister of Finance, the Netherlands
Zhou Xiaochuan, Governor, People’s Bank of China
Willem F. Duisenberg, President, European Central Bank (ECB)
Roger W. Ferguson, Jr., Chairman, Financial Stability Forum (FSF)
Heiner Flassbeck, Officer-in-Charge, Division on Globalization and Development Strategies, United Nations Conference on Trade and Development (UNCTAD)
Donald J. Johnston, Secretary-General, Organization for Economic Cooperation and Development (OECD)
Ian Kinniburgh, Director, Development Policy and Planning Office, Department of Economic and Social Affairs, United Nations (UN)
Malcolm D. Knight, General Manager, Bank for International Settlements (BIS)
Eddy Lee, Director, International Policy Group Department, International Labor Organization (ILO)
Trevor A. Manuel, Chairman, Joint Development Committee
Pedro Solbes, Commissioner for Economic and Monetary Affairs, European Commission
Francisco Thompson-Flores, Deputy Director-General, World Trade Organization (WTO)
James D. Wolfensohn, President, World Bank
Ninth Meeting, Washington D.C., April 24, 2004
1. The International Monetary and Financial Committee held its ninth meeting in Washington, D.C., on April 24, 2004, under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom.
The Global Economy and Financial Markets–Sustaining the Recovery
2. The Committee welcomes the strengthening of the global economic recovery since its meeting last September. Industrial production and global trade have picked up sharply, and improved prospects in most regions point to stronger global growth going forward. However, a number of risks remain. These arise from large global imbalances, medium-term fiscal challenges in many countries, and the implications of the eventual transition to a higher interest rate environment. Continuing geopolitical uncertainties and developments in oil markets also remain important concerns.
3. The priority now is to implement the macroeconomic and structural policy measures that will help achieve a robust, balanced, and sustainable recovery. Structural reforms are essential to improve growth potential. Priority should be given to medium-term fiscal consolidation; reforms of pension and health care systems; better functioning labor and product markets; and reduction of vulnerabilities in banking and corporate sectors. The Committee calls on all countries and regions to play their part and cooperate in addressing global imbalances.
4. The economy of the United States is expanding briskly, and Japan’s economy continues to recover. The recovery in the euro area so far is more subdued. Monetary policy in advanced economies will need to remain consistent with price stability and support the recovery; in many countries where growth is strengthening, interest rates will overtime need to rise to more neutral levels; and it will be important to communicate policy intentions clearly. The Committee encourages countries to take advantage of the current environment to strengthen the foundations for sustainable growth. Priorities for action include medium-term fiscal consolidation in the United States; acceleration of structural reforms in the euro area; and continued banking and corporate reforms in Japan. Fiscal consolidation is also needed in the euro area and Japan.
5. The Committee is encouraged by the strong performance and recovery in many emerging market and developing countries, which has been aided by improved fundamentals and a rebound in private capital flows. Countries should continue to use the opportunity provided by the favorable financial market environment to strengthen growth prospects and reduce vulnerabilities. This will require steps to further strengthen fiscal positions and improve the structure and sustainability of debt, sustained and broad-ranging structural reforms, and, in some emerging market countries, a move toward more exchange rate flexibility as appropriate. The Committee welcomes the improvement in Argentina’s macroeconomic performance, and calls on the government to continue to push ahead with full implementation of the policies and provisions of its economic recovery program aimed at strengthening growth, including negotiations aimed at reaching a sustainable debt restructuring through a collaborative agreement with creditors.
6. Economic performance in many low-income countries continues to improve. Nevertheless, the Millennium Development Goals (MDGs) set out in the UN Millennium Declaration remain at risk, particularly in sub-Saharan Africa, and much remains to be done by all partners in the global effort to deliver them. The Committee underscores that stronger domestic institutions, sound economic policies, trade integration, and less burdensome regulation will be needed to underpin faster growth and poverty reduction. It welcomes the recent steps taken through the New Partnership for Africa’s Development (NEPAD) and the African Union to improve governance and eradicate corruption. It calls on the international community to provide additional and coordinated assistance-including technical assistance; policy advice; increased and more effective aid including grants and debt relief; and greater access to industrial country markets.
7. The Committee received the report of Dr. Supachai Panitchpakdi, Director-General of the World Trade Organization. It reiterates the critical importance of open markets for supporting broad-based global economic growth and prosperity. The Committee calls for constructive and determined efforts by all countries to achieve early progress with the Doha Round, focusing on the issues of importance to all countries of open markets and fair access, and the reduction of trade-distorting subsidies in all areas, notably in agriculture. A successful completion of the round is a shared responsibility, important for all countries, particularly developing countries. The Committee supports the IMF’s role in advocating trade liberalization and helping members to take all the necessary actions to gain full advantage of the opportunities provided by more open trade. It welcomes the IMF’s decision to establish a Trade Integration Mechanism, designed as a temporary policy to address concerns associated with the current round of multilateral trade negotiations.
Crisis Prevention and IMF Surveillance Across the Membership: Priorities, Tools, and Modalities
8. Effective and evenhanded IMF surveillance remains an essential element of the international community’s efforts to enhance crisis prevention, promote financial stability, and foster high and sustainable growth. The Committee especially welcomes the increased focus of surveillance on financial sector and capital market issues-including the work from the Financial Sector Assessment Program, Reports on the Observance of Standards and Codes, and Offshore Financial Center assessments; economic developments and policies in countries of systemic or regional importance; early identification of potential vulnerabilities; and institutional foundations of growth. It also welcomes the work already under way and the proposed pilots on the treatment of public investment in IMF advice and arrangements with a view to protecting infrastructure investment, consistent with macroeconomic stability and debt sustainability.
9. The Committee welcomes efforts to bring a fresh perspective to the surveillance of program countries, and the decisions taken to increase the transparency of surveillance. It calls for a strengthening of efforts to ensure the objectivity of surveillance (including through debt sustainability analysis), and requests the IMF to explore ways to support countries’ own economic efforts when the IMF is not providing financial assistance. The Committee looks forward to the forthcoming biennial review of surveillance, which should provide a thorough assessment and candid review of surveillance, and propose ways to enhance its focus, quality, persuasiveness, impact, and overall effectiveness.
10. The Committee welcomes the greater focus on vulnerabilities and key issues for surveillance identified at its meeting in Dubai: improving debt sustainability; reducing balance sheet vulnerabilities; and making progress on structural reform and sustainable medium-term fiscal frameworks. It agrees that further progress in these areas, as well as with policies to facilitate the adjustment of global imbalances, remain key priorities for surveillance in the coming year. Surveillance will also need to pay due attention to relevant political risks and to vulnerabilities to exchange rate and interest rate movements.
11. The Committee looks forward to further work on ways to reduce vulnerabilities and provide support for members with strong policies in dealing with external financial developments. It looks forward to the upcoming discussion of precautionary arrangements and their potential to assist members’ own efforts to prevent balance of payments crises and as a possible exit strategy from IMF financial support.
12. The Committee welcomes the inclusion by an increasing number of countries of collective action clauses (CACs) in their international sovereign bonds and the convergence toward a market standard. It calls on the IMF to continue to promote progress in this area. The Committee also encourages sovereign debtors and private creditors to continue their work on a voluntary Code of Conduct, and looks forward to reviewing further work on issues of general relevance to the orderly resolution of financial crises. The Committee takes note of the Executive Board’s ongoing review of the framework, and application of procedures, for exceptional access to IMF resources. It calls on the IMF to continue reviewing implementation of its lending into arrears policy.
Enhancing IMF Support to Low-Income Members: Instruments and Financing; IMF-World Bank Collaboration; and Promoting Debt Sustainability
13. The Committee reiterates that the IMF-in partnership with multilateral development banks and donors-has an important role to play in assisting its low-income members with effective policy advice, financing, and technical assistance to achieve high and sustained growth and poverty reduction. It welcomes the progress on better tailoring the IMF’s assistance to the differing financing and policy needs of low-income countries. The Committee looks forward to further work on a strengthened process of surveillance for those countries where the IMF is not providing financing, with a view toward enhancing the signaling role of surveillance and promoting country ownership. It underscores the importance of improving the macroeconomic design of PRGF-supported programs, including the social impact. The Committee underscores the importance of maintaining an adequate PRGF financing capacity. In order to meet future needs, it calls for further discussions on the financing of a self-sustained PRGF. The Committee welcomes that some countries have indicated a willingness to provide additional resources.
14. The Committee reiterates that the Monterrey Consensus and Poverty Reduction Strategy Paper (PRSP) approach provide the appropriate framework for the IMF’s engagement with low-income countries and its participation in global efforts toward achieving the MDGs. It encourages a further sharpening of the focus of PRSPs and PRGF-supported programs to enhance their linkage to the MDGs and their operational usefulness for policy choices and donor coordination. The first Global Monitoring Report on meeting the MDGs highlights the significant remaining challenges. The Committee expresses concern that, on current trends, most MDGs will not be met without an increase in the level and effectiveness of financial resources in support of strong policies. It looks forward to reviewing at its next meeting the ongoing joint work with the World Bank on aid effectiveness, absorptive capacity, results-based measurement mechanisms, and various policy options and financing mechanisms, such as an international financing facility and other options. In this regard, it welcomes the consultation with emerging markets and developing countries. The Committee welcomes the recent review of IMF-World Bank collaboration, and supports the plans for improved coordination.
15. The Committee welcomes the progress in providing debt relief under the enhanced HIPC Initiative, with a further five countries reaching their completion point since the Annual Meetings. It looks forward to continued further progress toward full implementation of the Initiative, and takes note of the work being undertaken on options for addressing the sunset clause. The Committee urges all creditors that have not yet done so to deliver debt relief in full. It welcomes the development by the IMF and the World Bank of a debt sustainability framework for low-income countries, and looks forward to further work to make it operational.
16. The Committee underscores the importance of IMF technical assistance in supporting members’ efforts to build institutional capacities and implement sound economic policies and financial systems, which will lay the foundations for sustained growth and poverty reduction.
17. The Committee underscores the importance of further determined action by the international community to combat money laundering and the financing of terrorism. It welcomes the significant progress that has been made under the 12-month IMF/World Bank pilot program of AML/CF assessments. The Committee endorses the recent decision by the Executive Board to make the scope of the IMF’s involvement in AML/CF assessments comprehensive and a regular part of the IMF’s work. It encourages all international organizations and bodies to work together closely in conducting assessments and delivering critically needed technical assistance. The Committee urges all members to adopt and implement the revised FATF 40 + 8 Recommendations as the accepted international standard.
18. The IMF’s effectiveness and enhanced credibility as a cooperative institution also depends on all members having appropriate voice and representation. Efforts should continue to be made to enhance the capacity of developing and transition countries to participate more effectively in IMF decision making. The Committee calls on the Executive Board to continue its work on IMF quotas, voice, and representation, and looks forward to a report on progress at its next meeting. The Committee recommends completion of the ratification of the Fourth Amendment.
19. The IMF’s liquidity is adequate to meet the near-term projected needs of its members although continued monitoring will be important.
20. The Committee welcomes the high-quality work of the Independent Evaluation Office, and looks forward to its reports on PRSP/PRGF, technical assistance, and the role of the IMF in Argentina from 1991 to 2002.
21. The Committee pays tribute to Mr. Horst Köhler for his leadership of the International Monetary Fund as Managing Director during the past four years. In the face of a difficult world economic situation and unprecedented challenges for the international community, Mr. Köhler has worked tirelessly to promote close international cooperation so that all can share in the benefits of globalization. He has strengthened the IMF’s role in working for the stability of the international financial system, has helped the IMF lead the international effort to assist low-income countries, and has instilled a listening and learning culture in the IMF that will change the way in which the IMF interacts with members and civil society.
22. The Committee also acknowledges the contribution of Mr. Jacques J. Polak through 57 years of service to the IMF.
23. The next meeting of the IMFC will be held in Washington, D.C., on October 2, 2004.
International Monetary and Financial Committee Attendance
April 24, 2004
Acting Managing Direc
Anne O. Krueger
Members or Alternates
Abraham A. Al-Assaf, Minister of Finance, Saudi Arabia
Mervyn King, Governor, Bank of England, United Kingdom (Alternate for Gordon Brown, Chancellor of the Exchequer, United Kingdom)
Peter Costello, Treasurer of the Commonwealth of Australia
M.R. Pridiyathorn Devakula, Governor, Bank of Thailand
Hans Eichel, Minister of Finance, Germany
Per-Kristian Foss, Minister of Finance, Norway
Francisco Gil-Diaz, Secretary of Finance and Public Credit, Mexico
Ralph Goodale, Minister of Finance, Canada
Mohammed K. Khirbash, Minister of State for Finance and Industry, United Arab Emirates
Aleksei Kudrin, Minister of Finance, Russian Federation
Mohamed Laksaci, Governor, Banque d’Algerie
Roberto Lavagna, Minister of Economy and Production, Argentina
Lesetja Kganyago, Director General: Finance, National Treasury, South Africa (Alternate for Trevor Manuel, Minister of Finance, South Africa)
Jean-Pierre Roth, Chairman of the Governing Board, Swiss National Bank (Alternate for Hans-Rudolf Merz, Minister of Finance, Switzerland)
Antonio Palocci, Minister of Finance, Brazil
Didier Reynders, Minister of Finance, Belgium
Nicolas Sarkozy, Minister of State; Minister of Economy, Finance, and Industry, France
Yaga V. Reddy, Governor, Reserve Bank of India (Alternate for Jaswant Singh, Minister of Finance, India)
Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System (Alternate for John W. Snow, Secretary of the Treasury, United States)
Sadakazu Tanigaki, Minister of Finance, Japan
Paul Toungui, Minister of State, Minister of Finance, Economy, Budget, and Privatization, Gabon
Giulio Tremonti, Minister of Economy and Finance, Italy
Gerrit Zalm, Minister of Finance, the Netherlands
Zhou Xiaochuan, Governor, People’s Bank of China
Roger W. Ferguson, Jr., Chairman, Financial Stability Forum (FSF)
Donald J. Johnston, Secretary-General, Organization for Economic Cooperation and Development (OECD)
Malcolm D. Knight, General Manager, Bank for International Settlements (BIS)
Jan Kregel, Interregional Adviser, Division on Globalization and Development Strategies, United Nations Conference on Trade and Development (UNCTAD)
Eddy Lee, Economic Adviser and Director, International Policy Group Department, International Labor Organization (ILO)
Jose Antonio Ocampo, Under Secretary-General, Department of Economic and Social Affairs, United Nations (UN)
Ngozi N. Okonjo-lweala, Chairperson, a.i., Joint Development Committee
Klaus P. Regling, Director-General for Economic and Financial Affairs, European Commission
Supachai Panitchpakdi, Director-General, World Trade Organization (WTO)
Jean-Claude Trichet, President, European Central Bank (ECB)
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)
Sixty-Eighth Meeting, Dubai, United Arab Emirates, September 22, 2003
1. At our last meeting, we strongly reaffirmed our commitment to achieve the Millennium Development Goals (MDGs) set out in the UN Millennium Declaration endorsed by heads of state and governments in the UN General Assembly on September 8, 2000, and, in particular, our commitment to the global effort needed to reduce poverty. Today we renewed that commitment and continued our work on implementing the strategies, partnerships, and actions agreed in Doha, Monterrey, and Johannesburg.
2. We welcomed the paper on supporting sound policies with adequate and appropriate financing and its country-based approach. We agreed that there was an urgent need to scale up efforts if the MDGs are to be met and that this would require enhanced concerted actions on the part of both developing and developed countries and the international institutions. Developing countries will have to sustain their efforts to strengthen policies and governance so as to ensure that domestic resources, private inflows, and aid can be used effectively in spurring growth, improving service delivery, and reducing poverty. Developed countries will need to move vigorously in supporting these efforts with more and better aid, debt relief, and improved market access.
3. To implement this partnership to meet the MDGs, systematic efforts will be needed to achieve greater synergies between poverty reduction strategies and longer-term MDG targets, to specify and implement the actions needed to accelerate progress on the MDGs, and to identify the volumes and forms of financing needed to implement agreed strategies. We agreed that ensuring adequate, timely, and more predictable financing and enhancing aid absorptive capacity through policy and institutional reforms would both be critical to the virtuous cycle of actions needed to meet the MDGs. We urge that countries, without delay, take specific steps to meet their commitments to provide additional aid resources by 2006. Furthermore, we call upon the Bank, working with the Fund, to examine the merits of various policy options, such as an international financing facility, to mobilize the substantial additional resources that are needed over the medium term and can be effectively used to achieve development results and in scaling up progress toward the MDGs. Developing and emerging market countries should also be consulted closely. We asked the Bank to report to us at our Spring 2004 meeting.
4. Changes are also needed in the way that aid is provided, as highlighted in the Declaration of the Rome High-Level Forum on Harmonization. In addition to streamlining procedures and lowering transaction costs, assistance will have to be better aligned to country need, to country priorities and processes, to countries that demonstrate the ability to achieve measurable development results; and to support the development of countries’ capacity. Commitments should also be predictable and long term; provided in a form that can meet cash requirements to achieve the MDGs; and in appropriate country circumstances, especially in view of long-term debt sustainability, more of it should be provided in grants and, where conditions warrant, in ways that can finance recurrent costs.
5. We continue to believe that a successful conclusion to the Doha Development Agenda is vital to growth, poverty reduction, and progress in attaining the MDGs. We therefore regret the temporary setback to multilateral trade negotiations at WTO’s Fifth Ministerial Conference and urge all participants to capitalize on progress to date and put the process back on track as soon as possible. We welcome the Bank and the Fund’s recent pledge to support countries to benefit fully from a more liberalized trading system. We also urge continued efforts to tailor Bank lending activities to support country-owned trade initiatives, translating analysis and diagnostics into meaningful operations.
6. As called for at Monterrey, we have continued our consideration of innovative and pragmatic ways to enhance the voice and effective participation of developing and transition countries in the work and decision making of the Bank and the Fund. There is no single approach to accomplish this, but, rather, action is required over time across a range of issues. The development of the Poverty Reduction Strategy approach represents a step toward ensuring responsiveness by the Bretton Woods Institutions to country-owned strategies and priorities. In this context, we also welcome ongoing efforts to promote greater openness and transparency, decentralization and staff diversity in all its dimensions. We urge the Bank and the Fund to step up these efforts.
7. We welcomed the further progress by Directors on measures to enhance capacity in developing and transition country Executive Directors’ offices and in capitals. We also welcomed the proposed Analytical Trust Fund for use by Executive Directors representing sub-Saharan African developing countries in undertaking independent research and analysis on development issues. We called for further work on additional capacity-enhancing measures, including secondments. We look forward to concrete action by our Spring meeting.
8. The IDA-13 Mid-Term Review and IDA-14 negotiations provide a timely opportunity to enhance borrower participation in the IDA replenishment process and its Board’s decision making. We noted that by taking up their full IDA subscriptions, developing countries could significantly increase their aggregate voting share and we encouraged these countries to take the necessary actions in this regard. We urged further consideration and progress on all these issues.
9. We note that the complexities involved in changing the voting structure and composition of the Boards will require time and effort to arrive at the necessary political consensus. However, we recognize the need to continue our efforts on these issues. We asked the Boards of Executive Directors to report back to us on all aspects of the voice issue at the 2004 Annual Meeting. A roadmap on procedures and next steps will be considered at our Spring meeting.
10. We reviewed the status of the HIPC Initiative and reconfirmed our commitment to its objectives, full financing, and implementation. We also recalled that within existing guidelines, additional relief can be provided at the completion point, on a case-by-case basis, and noted ongoing discussions about the topping-up methodology and requested further work on this issue. Some HIPCs face a continued challenge to reach the decision point and we encouraged ongoing efforts by staff in this area, including application of the approach contained in the World Bank Task Force Report on Low-Income Countries under Stress. We recalled the importance of full creditor participation and again urged all official and commercial creditors that have not yet done so to participate in the HIPC initiative and welcomed the recent decisions by some non-Paris Club creditors (India and Libya). We look forward to a report being prepared by the staffs of the Bank and the Fund on a forward-looking framework for debt sustainability in low-income countries and to reviewing the report at our next meeting. We also encouraged further work by the Bank and the Fund on ways to help reduce the vulnerability of these countries to exogenous shocks, including commodity market and weather-related shocks.
11. We are encouraged by the continuing progress under the PRSP approach. We welcome the increasing openness of policy dialogue with all stakeholders, improved focus on sources of growth and the investment climate and on policies needed to reduce poverty and achieve the MDGs, greater realism and better prioritization, increased pro-poor public spending, and efforts to strengthen public expenditure management and better integrate expenditure proposals into national budgets. At the same time, we recognized that PRSPs are charged with multiple and sometimes competing objectives, and the challenge now is to achieve successful implementation, including through much more effective donor alignment and harmonization around national strategies. We also asked the Bank and the Fund to respond to requests for assistance from countries undertaking Poverty and Social Impact Analyses (PSIAs) and developing alternative scenarios to meet the MDGs, where appropriate.
12. We stressed the need for accelerating progress and results on service-delivery MDGs, including through the Education for All Fast Track Initiative (FTI). We asked the Bank to report on progress on funding and lessons from the implementation of the FTI at our next meeting.
13. We supported the World Bank Group’s renewed focus on infrastructure, in light of the important contribution infrastructure makes to sustainable economic growth and reaching the MDGs by improving the investment climate and supporting the development requirements of low- and middle-income countries. We welcomed the report on the infrastructure action plan, as well as the follow-up to the recommendations of the World Panel on Financing Water Infrastructure, and asked the Bank Group to work with member countries to secure its early implementation within their development strategies. In particular, we noted the importance of scaling up investments within a comprehensive development approach, and the catalytic role international financial institutions can play in this regard. We stressed that the right policy environment and institutional and maintenance capacity are crucial for ensuring sustainable infrastructure investments. We are pleased the Bank Group has intensified efforts to build on its international comparative advantage, expertise, and established policies, by investing in infrastructure projects, supported by country diagnostic work. We also urged the Bank Group to engage in cross-border investments, especially in light of the linkages to the trade agenda. We encouraged the Bank, the IFC, and MIGA to continue to work together on initiatives that facilitate and promote the use of joint instruments, and through work at the sub-sovereign level and via guarantees. Finally we noted that an implementation progress update would be provided to Bank Executive Directors before our next meeting, and we will return to this issue at a future meeting.
14. Progress in all areas we discussed and others is critical to achieving the MDGs and related development outcomes. We, therefore, welcomed the implementation report for the global monitoring of policies and actions for achieving the MDGs, which will allow the Committee to maintain a strategic overview on progress on key issues and priorities in the policy agenda and to reinforce accountabilities. We look forward to the first full report at our next meeting.
15. Finally, we noted the current difficulties in the region in which we met. We welcomed the active role of the World Bank in helping meet the urgent economic and social needs of the Palestinian people of the West Bank and Gaza. We also welcomed its role in promoting economic and infrastructure cooperation in the region. We noted the constructive role played by the Bretton Woods institutions, in cooperation with other international organizations, in positioning themselves to work closely with the people of Iraq in the task of reconstruction and development toward a future that will enable them to achieve their economic potential under their own leadership. We look forward to the forthcoming donors’ conference on Iraq, which will play a critical role in mobilizing resources adequate to placing Iraq on the path of economic recovery. Success both in the West Bank and Gaza and in Iraq, while challenging, is nonetheless essential to stability and development in the region and beyond.
16. We wish to thank the authorities and people of the United Arab Emirates for their excellent hospitality and facilities.
17. We welcome confirmation of Mr. Trevor Manuel, Minister of Finance of South Africa, for an additional term as Chairman.
18. The next meeting of the Committee will be held in Washington, D.C., on April 25, 2004.
Sixty-Ninth Meeting, Washington D.C., April 25, 2004
1. The strategies and decisions agreed in Doha, Monterrey, and Johannesburg set out a framework for fighting poverty and achieving the internationally agreed goals of the UN Millennium Declaration, based on countries pursuing sound policies and good governance, combined with stronger international cooperation and support. We met today to assess progress based on the first Global Monitoring Report. We welcomed the report, which provides a good basis for our yearly review. Building on this work, future reports should focus on the agenda of monitorable actions in the identified priority areas in order to reinforce accountabilities and enhance cooperation among all development partners.
2. We recognize that there has been progress on many fronts, including significant reforms undertaken by developing countries and important gains in reducing income poverty. However, we are very concerned that, based on current trends, most Millennium Development Goals (MDGs)1 will not be met by most developing countries, particularly in sub-Saharan Africa. All parties, developing and developed countries and the international institutions, must urgently enhance concerted action to accelerate progress toward these goals.
3. Sustainable and inclusive growth needs to be accelerated in many developing countries, in particular through improving the enabling climate for private sector activity; strengthening reforms, capacity, and results focus in public institutions and improving the quality of governance; scaling up effective investment in infrastructure; and ensuring access to health care, education and other basic social services and fighting the HIV/AIDS epidemic.
4. Specific priorities must be determined at the country level in the context of country-owned and monitored development strategies, as reflected in the Poverty Reduction Strategy Papers (PRSPs) in the case of low-income countries and respective national strategy frameworks in middle-income countries (MICs). We look forward to reviewing progress on the Bank’s efforts to enhance its support for development in MICs at a future meeting. Given the centrality of faster and more equitable economic growth for making greater progress on the MDGs, we welcomed the efforts of the Bank to support stronger investment climates in developing countries and we intend to discuss improving the climate for private sector activity at our next meeting. As we have noted previously, infrastructure investment within the right policy environment makes a fundamental contribution to economic growth and achievement of the MDGs. The implementation of the infrastructure action plan of the Bank has been reviewed by the Board of Directors and we look forward to a discussion on progress at our next meeting.
5. Developed countries must meet their commitments to help accelerate progress. Sustaining stable, balanced, and strong growth in the global economy is a prerequisite. Ensuring a successful, pro-development, and timely outcome to the Doha Development Agenda is critical to global growth and the economic prospects of developing countries. We stressed our commitment to a constructive and determined effort to move the multilateral trade agenda forward. We again stressed that it is essential for developed countries to do more to liberalize their markets and eliminate trade-distorting subsidies, including in the areas of agriculture, textiles, and clothing, which are of particular importance for developing countries. At the same time, we emphasized the importance of trade facilitation and liberalization efforts in developing countries. We welcomed the Bank’s continuing efforts to promote trade facilitation and the Integrated Framework, as well as the IMF’s recently adopted Trade Integration Mechanism, which will provide additional support and assurances to developing countries as they integrate further into the global trading system. We also urged continued efforts to tailor Bank lending activities to support capacity building and country-owned trade initiatives. We noted the growing importance of migration and, with it, workers’ remittances and called for further work to improve understanding of their determinants and to create a supportive environment to enhance their development impact.
6. More aid is also required. It should be predictable, timely, long term and more effective. We urged developed countries that have not done so to make concrete efforts toward the target of 0.7 percent of GNP as ODA. A substantial and timely agreement on the funding of IDA-14 will be a critical affirmation of our commitment to mobilize the resources for our support for strong, results-oriented action by partners in the poorest countries.
7. We noted a progress report on financing modalities and we look forward to a report at our next meeting on aid effectiveness, absorptive capacity, results-based measurement mechanisms, and elaboration of policy options and financing mechanisms for mobilizing additional resources (including examining an international finance facility, global taxation, and other proposals). More aid can be sustained only by showing positive results. This requires a strengthened effort to implement the Declaration of the Rome High-Level Forum on Harmonization and the Core Principles of Marrakech, including strengthening country capacity to manage for results. We support the work by the OECD/DAC, jointly with development partners, to address the continuing divide between agreed global policies and detailed operational procedures and country-level practices.
8. We also recalled that the IFIs are accountable for their contribution to implementing the Monterrey consensus. Key areas for action include harmonization, managing for results, and responsiveness to clients. We urged them to increase their efforts to identify and meet needs of client countries. Taking into account fiscal constraints facing clients, we encouraged the Bank to consider new innovative products, improve internal efficiencies, and simplify the application of lending policies in order to reduce the costs of doing business while respecting fiduciary and safeguard standards.
9. In April 2002, we endorsed the plan to help make primary education a reality for all children by 2015 and achieve gender equality in primary and secondary education by 2005. The Fast Track Initiative (FTI) was designed to address the data, policy, capacity, and resource gaps that constrain progress in achieving education for all. Its implementation has highlighted the potential as well as the challenges associated with scaling up the MDG agenda more generally and, in particular, the need for credible, effective, and predictable financing in support of adequate policies and programs. The experience of FTI so far has demonstrated that it should be anchored in countries’ Poverty Reduction Strategies if it is to be effective. We urged all countries, developed and developing, to take the additional steps required to make this initiative succeed and requested the Bank Board to continue to monitor progress.
10. We also reviewed implementation of the HIPC Initiative and recalled the importance of full creditor participation for its success. Thirteen countries have reached the completion point and another 14 are between decision and completion point. However, 11 countries, several of which are affected by conflict and some with protracted arrears, are either yet to reach the decision point or to begin establishing a track record under a Fund-supported program. We urged the Bank and the Fund to help facilitate these countries’ rapid access to HIPC debt relief when their outstanding issues are addressed. We also urged that careful consideration be given to options to deal with the HIPC sunset clause which is scheduled to take effect end-2004.
11. We broadly supported the principles underlying the proposed framework for debt sustainability in low-income countries while acknowledging that the modalities and operational implications remained to be clarified. We stressed the need for a consistent and coordinated approach among borrowers, creditors, and donors, to ensure that resources to low-income countries are provided on appropriate terms, including the degree of concessionality and level of grant financing. This must build on full implementation of the HIPC initiative. We also welcomed work by the Fund and the Bank on measures and instruments to assist low-income countries to deal with exogenous shocks and urged them to accelerate their work, in close collaboration, for early consideration by the Boards.
12. Strengthening the voice and participation of developing and transition countries in the work and decision making of the Bretton Woods institutions remains a major challenge. We welcomed the further progress made, particularly on capacity building, since our last meeting, including the establishment of an Analytical Trust Fund to support the African Chairs and a secondment program at the Bank. We look forward to receiving reports from our Boards on all aspects of this issue and to further discussion at the 2004 Annual Meeting.
13. The next meeting of the Committee will be held in Washington, D.C., on October 3, 2004.
Eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria, and other diseases; ensure environmental sustainability; and develop a global partnership for development.
|Director Alternate||Casting Votes of||Votes by Country||Total Votes1||Percent of IMF Total2|
|Nancy p. Jackin||United States||371,743||371,743||17.14|
|Tom Scholar||United Kingdom||107,635||107,635||4.96|
|Martin A. Brooke|
|(Netherlands)||Bosnia and Herzegovina||1,941|
|Yuriy G. Yakusa||Bulgaria||6,652|
|Macedonia, former Yugoslav Republic of||939|
|Luis Marti||Costa Rica||1,891|
|Venezuela, Repiiblica Bolivariana de||26,841||92,989||4.29|
|Pier Carlo Padoan||Albania||737|
|Ian E. Bennett||Antigua and Barbuda||385|
|Charles X. O’loghlin||Barbados||925|
|St. Kittsand Nevis||339|
|St. Vincent and the Grenadines||333||80,636||3.72|
|Jon A Solheim||Denmark||16,678|
|Michael J. Callaghan||Australia||32,614|
|Michael H. Reddell||Korea||16,586|
|(New Zealand)||Marshall Islands||285|
|Micronesia, Federated States of||301|
|Papua New Guinea||1,566|
|Sulaiman M. AI-Turki||Saudi Arabia||70,105||70,105||3.23|
|Sri Mulyani tndrawati||Brunei Darussalam||2,402|
|Lao People’s Democratic Republic||779|
|Peter J. Ngumbullu||Burundi||1,020|
|A. Shakour Shaalan||Bahrain||1,600|
|Oussama J. Kanaan||Iraq||5,290|
|Libyan Arab Jamahiriya||11,487|
|Syrian Arab Republic||3,186|
|United Arab Emirates||6,367|
|Yemen, Republic of||2,685||64,008||2.95|
|(Poland)||Serbia and Montenegro||4,927|
|AlekseiV. Mozhin||Russian Federation||59,704||59,704||2.75|
|Abbas Mirakhor||Afghanistan, Islamic State of||1,869|
|(Islamic Republic of Iran)||Algeria||12,797|
|(Morocco)||Iran, Islamic Republic of||15,222|
|Roberto Steiner||Dominican Republic||2,439|
|Trinidad and Tobago||3,606||53,634||2.47|
|(Sri Lanka)||Sri Lanka||4,384||52,112||2.40|
|Guillermo Le Fort||Argentina||21,421|
|Dam Ian Ondo Marie||Benin||869|
|(Equatorial Guinea)||Burkina Faso||852|
|laurean W. Rutayisire||Cameroon||2,107|
|Central African Republic||807|
|Congo, Democratic Republic of the||5,580|
|Congo, Republic of||1,096|
|Sao Tome and Principe||324|
Changes in the membership of the Executive Board between May 1, 2003, and April 30, 2004, were as follows:
Luis Marti (Spain) was elected Executive Director for Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, and Venezuela, effective May 1, 2003.
Haryuki Toyama (Japan) relinquished his duties as Alternate Executive Director to Ken Yagi (Japan), effective May 3, 2003.
Michio Kitahara (Japan) was appointed Alternate Executive Director to Ken Yagi (Japan), effective May 4, 2003.
Nioclas O’Murchu (Ireland) relinquished his duties as Alternate Executive Director to Ian Bennett (Canada), effective May 18, 2003.
Charles X. O’Loghlin (Ireland) was appointed Alternate Executive Director to Ian Bennett (Canada), effective May 19, 2003.
Ismaila Usman (Nigeria) was reelected Executive Director for Angola, Botswana, Burundi, Eritrea, Ethiopia, The Gambia, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Uganda, and Zambia, effective June 23, 2003.
WEI Benhua (China) relinquished his duties as Executive Director for China, effective July 6, 2003.
WANG Xiaoyi (China) relinquished his duties as Alternate Executive Director to WEI Benhua, effective July 6, 2003.
WANG Xiaoyi (China) was elected Executive Director for China, effective July 7, 2003.
GE Huayong (China) was appointed Alternate Executive Director to WANG Xiaoyi (China), effective August 1, 2003.
Ruediger von Kleist (Germany) relinquished his duties as Alternate Executive Director to Karlheinz Bischofberger (Germany), effective August 17, 2003.
Gert Meissner (Germany) was appointed Alternate Executive Director to Karlheinz Bischofberger (Germany), effective August 28, 2003.
Yaga V. Reddy relinquished his duties as Executive Director for Bangladesh, Bhutan, India, and Sri Lanka, effective September 6, 2003.
B. P. Misra (India) was elected Executive Director for Bangladesh, Bhutan, India, and Sri Lanka, effective September 26, 2003.
Mario Beauregard (Mexico) relinquished his duties as Alternate Executive Director to Luis Marti (Spain), effective November 15, 2003.
A. Guillermo Zoccali (Argentina) relinquished his duties as Alternate Executive Director to Guillermo Le Fort (Chile), effective December 28, 2003.
Vilhjalmur Egilsson (Iceland) relinquished his duties as Executive Director for Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden, effective January 9, 2004.
Jon A. Solheim (Norway) was elected Executive Director by Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden, effective January 10, 2004.
Moises Schwartz (Mexico) was appointed Alternate Executive Director to Luis Marti (Spain), effective January 12, 2004.
Hector Torres (Argentina) was appointed Alternate Executive Director to Guillermo Le Fort (Chile), effective March 1, 2004.
1301 K Street NW
Washington DC 20005
Telephone (202) 414 1000
Facsimile (202) 414 1301
Report of Independent Auditors
To the Board of Governors of the International Monetary Fund:
In our opinion, the accompanying balance sheets and the related statements of income, changes in resources and cash flows give a true and fair view of the financial condition of the General Department of the International Monetary Fund (the “IMF”) as at April 30, 2004 and 2003, and its results of operations and cash flows for the years then ended in conformity with International Financial Reporting Standards. These financial statements are the responsibility of the IMF’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with International Standards on Auditing, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 164 to 169 is presented for purposes of adding additional analysis and is not a required part of the basic financial statements. The supplementary information has been subjected to the auditing procedures applied in the audits of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole.
June 7, 2004
Balance Sheets as at April 30, 2004 and 2003
|Assets||Liabilities and Resources|
|Usable currencies||103,261,911||97,028,740||Remuneration payable||212,654||244,544|
|Other currencies||46,671,529||47,692,348||Other liabilities||100,189||140,347|
|Total currencies (Notes 3 and 4)||212,086,122||210,699,065||Special Contingent Account (Note 10)||1,495,019||1,401,019|
|SDR holdings||506,029||962,641||Members’ Resources:|
|Gold holdings (Note 5)||5,851,771||5,851,771||Quotas, represented by:|
|Reserve tranche positions (Notes 2 and 4)||62,856,110||68,008,951|
|Receivables (Note 6)||517,002||576,570||Subscription payments: Usable.||103,261,911||97,028,740|
|Other assets (Notes 7 and 14)||751,655||714,092||Other||46,675,979||47,693,609|
|Investments held in the Special Disbursement Account (Note 8)||2,630,804||2,590,349||Reserves of the General Resources Account||5,110,717||4,286,929|
|Structural Adjustment Facility loans (Note 3)||85,908||136,816||Accumulated resources of the Special Disbursement Account||2,716,712||2,727,165|
|Total Assets||222,429,291||221,531,304||Total Liabilities and Resources||222,429,291||221,531,304|
|/ s / Eduard Brau||/ s / Director, Finance Department|
|Rodrigo de Rato||Managing Director|
Income Statements for the Years Ended April 30, 2004 and 2003
|Interest and charges (Note 6)||2,231,678||2,295,250|
|Interest on SDR holdings||16,630||28,038|
|Investment income of the Special Disbursement Account.||40,938||61,431|
|Other charges and income (Note 6)||90,676||131,629|
|Remuneration (Note 9)||966,404||1,201,347|
|Administrative Expenses (Note 13)||548,792||607,086|
|Total Net Income||864,726||707,915|
|Net Income of the General Department comprises:|
|Net income of the General Resources Account.||823,788||646,484|
|Income of the Special Disbursement Account||40,938||61,431|
Statements of Changes in Resources for the Years Ended April 30, 2004 and 2003
|General Resources Account||Special Disbursement Account Accumulated Resources|
|Quotas||Special Reserve||General Reserve||Total Reserves|
|Balance at April 30, 2002||212,415,900||2,391,224||1,249,221||3,640,445||2,878,993|
|Transfers to the PRGF Trust||-||-||-||-||(149,259)|
|Transfers to the PRGF-HIPC Trust||-||-||-||-||(64,000)|
|Balance at April 30, 2003||212,731,300||2,381,454||1,905,475||4,286,929||2,727,165|
|Transfers from the Supplementary Financing|
|Facility Subsidy Account||-||-||-||-||139|
|Transfers from the PRGF Trust||-||-||-||-||6,170|
|Transfers to the PRGF-HIPC Trust||-||-||-||-||(57,7001)|
|Balance at April 30, 2004||212,794,000||2,415,435||2,695,282||5,110,717||2,716,712|
Statements of Cash Flows for the Years Ended April 30, 2004 and 2003
|Usable currencies and SDRs from operating activities|
|Adjustments to reconcile net income to usable resources generated by operations:|
|Changes in receivables and other assets.||22,005||(37,005)|
|Changes in remuneration payable and other liabilities||(72,048)||(8,046)|
|Increase in the Special Contingent Account.||94,000||94,000|
|Usable currencies and SDRs from credit to members:|
|Purchases in currencies and SDRs, including reserve tranche purchases||(17,829,722)||(21,783,516)|
|Repurchases in currencies and SDRs||21,638,613||7,783,894|
|Repayments of Structural Adjustment Facility loans.||50,908||204,876|
|Net usable currencies and SDRs provided by (used in) operating activities||4,768,482||(13,037,882)|
|Usable currencies and SDRs from investment activities|
|Net acquisition of investments by the Special Disbursement Account||(40,455)||(53,048)|
|Net usable currencies and SDRs used by investment activities||(40,455)||(53,048)|
|Usable currencies and SDRs from financing activities|
|Subscription payments in SDRs and usable currencies||15,675||78,850|
|Changes in composition of usable currencies||1,084,248||7,271,790|
|Transfers to the PRGF Trust, PRGF-HIPC Trust, and other accounts||(51,391)||(213,259)|
|Net usable currencies and SDRs provided by financing activities||1,048,532||7,137,381|
|Net increase (decrease) in usable currencies and SDRs||5,776,559||(5,953,549)|
|Usable currencies and SDRs, beginning of period||97,991,381||103,944,930|
|Usable currencies and SDRs, end of period||103,767,940||97,991,381|
Notes to the Financial Statements as at April 30, 2004 and 2003
1. Purpose and Organization
The IMF is an international organization of 184 member countries. It was established to promote international monetary cooperation and exchange stability and to maintain orderly exchange arrangements among members; to facilitate the expansion and balanced growth of international trade, and contribute thereby to the promotion and maintenance of high levels of employment; and to provide temporary financial assistance to member countries under adequate safeguards to help ease balance of payments adjustment. The IMF conducts its operations and transactions through the General Department and the Special Drawing Rights Department (the SDR Department). The General Department consists of the General Resources Account (GRA), the Special Disbursement Account (SDA), and the Investment Account. The latter has not been established. The IMF also administers trusts and accounts established to perform financial and technical services and financial operations consistent with the purposes of the IMF. The resources of these trusts and accounts are contributed by members or the IMF through the SDA. The financial statements of the SDR Department and these trusts and accounts are presented separately.
General Resources Account
The GRA holds the general resources of the IMF Its resources reflect the receipt of quota subscriptions, use and repayment of IMF credit, collection of charges on the use of credit, payment of remuneration on creditor positions, borrowings, and payment of interest and repayment of borrowings.
Special Disbursement Account
The assets and resources of the SDA are held separately from other accounts of the General Department. Resources of the SDA include transfers received from the Trust Fund, a trust administered by the IMF as trustee (in liquidation), and part of the proceeds from the sales of the IMF’s gold in the past. Income from the investment of gold profits in the SDA is to be transferred, as needed, to the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries Trust (PRGF-HIPC Trust), in accordance with decisions of the IMF. The SDA also holds outstanding loans extended under the Structural Adjustment Facility (SAF), which was established in March 1986 to provide balance of payments assistance on concessional terms to qualifying low-income developing country members.
Assets that exceed the financing needs of the SDA, excluding investments arising from the sales of gold undertaken pursuant to the 1999 decision on gold sales by the IMR are transferred to the Reserve Account of the Poverty Reduction and Growth Facility Trust (PRGF Trust), which is administered separately by the IMF as trustee.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the IMF are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue and Expense Recognition
The financial statements are prepared on the accrual basis; accordingly, income is recognized as it is earned, and expenses are recorded as they are incurred.
Unit of Account
The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000, and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2004 and 2003 and their amounts were as follows:
As of April 30, 2004, one SDR was equal to 1.45183 U.S. dollars (one SDR was equal to 1.38391 U.S. dollars as of April 30, 2003).
The IMF provides balance of payments assistance in accordance with established policies by selling to members, in exchange for their own currencies, SDRs or currencies of other members. When members make purchases, they incur obligations to repurchase the IMF’s holdings of their currencies arising from the purchases within specified periods by payments in SDRs or other currencies, as determined by the IMF IMF credit is subject to specific repayment schedules over periods which vary depending on the type of facility used. Members are entitled to repurchase, at any time, the IMF’s holdings of their currencies on which charges are levied and are expected to make repurchases as and when their balance of payments and reserve position improve.
The repurchase policies of the IMF are intended to ensure the revolving character of its resources. Programs supported by the IMF are guided by the requirement that members should be able to make repurchases in accordance with the normal terms of borrowing referred to as the obligation schedule, for the respective facilities. In keeping with a long-standing principle of the IMF that its resources should be repaid as soon as the balance of payments and reserve position improve, borrowers in a position to do so are expected to make repurchases ahead of the original schedule under predetermined expectation schedules. However, if a member’s external position is not sufficiently strong, it may request repayments on the expectation schedule be extended to the original obligation schedule by a period of up to one year for credit tranche and Supplemental Reserve Facility purchases (up to six months for purchases after February 21, 2003) or three years for Extended Fund Facility purchases. A member is considered overdue only after failure to make a payment on the repurchase obligation schedule.
Overdue Obligations and the Burden Sharing Mechanism
It is the policy of the IMF to exclude from current income charges due by members that are six months or more overdue in meeting payments to the IMF. The IMF fully recovers this lost income from unpaid charges under the burden sharing mechanism, through adjustments, in the current period, to the rates of charge and remuneration. Members that have borne the financial consequences of overdue charges receive refunds to the extent that overdue charges that had given rise to burden sharing adjustments are settled.
An impairment loss is recognized only if there is objective evidence of impairment as a result of a past event that occurred after initial recognition, and is determined as the difference between the credit oustanding’s carrying amount and the present value of the estimated future cash flows.
First Special Contingent Account
In view of the risk resulting from overdue credit, the IMF accumulates balances in the first Special Contingent Account (SCA-1). Losses arising from overdue principal, if realized, would be charged against the SCA-1. The IMF has not realized any losses on overdue financial obligations. However, the IMF considers it prudent to maintain the SCA-1 as added protection until all arrears are fully settled. Balances in the SCA-1 are to be distributed to the members that shared the cost of its financing when there are no outstanding overdue repurchases and charges, or at such earlier time as the IMF may decide.
Currencies consist of members’ currencies and securities held by the IMF Each member has the option to substitute non-negotiable and non-interest-bearing securities for the IMF’s holdings of its currency that exceed ¼ of 1 percent of the member’s quota. These securities are encashable by the IMF on demand.
Each member is required to pay to the IMF its initial quota and subsequent quota increases partly in its own currency, with the remainder to be paid in usable currencies prescribed by the IMF, or SDRs. One exception was the quota increase of 1978, which was paid entirely in members’ own currencies.
Usable currencies consist of currencies of members considered by the IMF to have strong balance of payments and reserve positions. These currencies are included in the IMF’s financial transactions plan to finance purchases and other transfers of the IMF. Participation in the financial transactions plan is reviewed on a quarterly basis. The IMF considers cash and cash equivalents to be usable currencies and SDR holdings. The changes in nonusable currency result from the IMF’s transactions (purchases and repurchases) where a member’s currency is exchanged for another member’s currency, or from the inclusion/exclusion of a member’s currency in the IMF’s transaction plan.
Valuation of Currencies
Currencies, including securities, are valued in terms of the SDR on the basis of the currency/SDR exchange rate determined for each currency. Securities are not marketable, but can be converted into cash on demand. Each member is obligated to maintain, in terms of the SDR, the value of the balances of its currency held by the IMF in the GRA. This requirement is referred to as the maintenance-of-value obligation. Whenever the IMF revalues its holdings of a member’s currency, a receivable or a payable is established for the amount required to maintain the SDR value of the IMF’s holdings of that currency. The currency balances in the balance sheet include these receivables and payables. All currencies were revalued in terms of the SDR on April 30, 2004 and 2003.
Although SDRs are not allocated to the IMF, the IMF may acquire, hold, and dispose of SDRs through the GRA. The IMF receives SDRs from members in the settlement of their financial obligations to the IMF and uses SDRs in transactions and operations with members. The IMF earns interest on its SDR holdings at the same rate as all other holders of SDRs.
SDR Interest Rate
The SDR interest rate is determined weekly by reference to a combined market interest rate, which is a weighted average of yields on short-term instruments in the capital markets of the euro area, Japan, the United Kingdom, and the United States.
The Articles of Agreement limit the use of gold in the IMF’s operations and transactions. Any use provided for in the Articles requires a decision adopted by an 85 percent majority of the total voting power. In accordance with the provisions of the Articles, whenever the IMF sells gold held on the date of the Second Amendment of the IMF’s Articles of Agreement (April 1, 1978), the portion of the proceeds equivalent at the time of sale to one SDR per 0.888671 gram of fine gold, which is equal to SDR 35 per fine troy ounce, must be placed in the GRA. Any excess over this value will be held in the SDA or transferred to the Investment Account. The IMF may also sell gold held on the date of the Second Amendment to those members that were members on August 31, 1975, in proportion to their quotas on that date, in exchange for their own currencies, at a price equivalent at the time of sale to one SDR per 0.888671 gram of fine gold.
The IMF values its gold holdings at historical cost using the specific identification method (see Note 5).
SAF Loans in the Special Disbursement Account
Repayments of all SAF loans are transferred to the PRGF Trust Reserve Account when received. Allowances for loan losses would be established if and when there is objective evidence that an impairment loss on loans has been incurred.
Investments in the Special Disbursement Account
Investments are made in debt securities and fixed-term deposits, which are classified as available for sale securities. Debt securities comprise securities issued by international financial organizations and domestic government bonds in the euro area, Japan, the United Kingdom and the United States. Investments are marked to market on the last business day of the accounting period. The carrying amounts of investments approximate their fair value and the unrealized gains and losses are included in the income statements. Purchases are valued and reflected on the trade date basis and sales are based on the actual settlement date valuations. Investment income comprises interest earned on investments, realized and unrealized gains and losses on investments, including currency valuation differences arising from exchange rate movements against the SDR.
Interest rate risk is managed by limiting the investment portfolio to a weighted average effective duration that does not exceed three years. Currency risk is minimized by investing in securities denominated in SDRs or in the constituent currencies of the SDR valuation basket. Risk is further minimized by ensuring that the currency composition of the investment portfolio matches, as closely as possible, the currency composition of the SDR valuation basket.
Fixed assets with a cost in excess of a threshold amount are capitalized at cost. Buildings and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from 3 years for equipment to 30 years for buildings.
Each member is assigned a quota that forms the basis of its financial and organizational relationship with the IMF A member’s quota is related to, but not strictly determined by, economic factors such as national income, the value of external trade and payments, and the level of official reserves. Quotas determine members’ subscriptions to the IMF, their relative voting power, access to financing, and their share in SDR allocations. Should a member withdraw from the Fund, quotas are repayable to the extent they are not needed to settle other net obligations of the member to the Fund.
Reserve Tranche Position
A member has a reserve tranche in the IMF when the IMF’s holdings of its currency, excluding holdings that reflect the member’s use of IMF credit, are less than the member’s quota. A member’s reserve tranche is considered a part of the member’s external reserves and the member may draw on the reserve tranche at any time when it represents that it has a balance of payments need. Reserve tranche purchases are not subject to repurchase obligations or charges.
The IMF’s reserves, consisting of the General Reserve and the Special Reserve, provide it with protection against financial risk of a general nature. The IMF determines annually what part of its net income will be retained and placed to the General Reserve or the Special Reserve, and what part, if any, will be distributed. The Articles of Agreement permit the IMF to use the Special Reserve for any purpose for which it may use the General Reserve, except distribution. After meeting the cost of administering the PRGF Trust, net operational income generated from the surcharges on purchases under the SRF, the credit tranches, and the EFF has been transferred to the General Reserve. All other income has been transferred to the Special Reserve.
The IMF levies periodic charges on members’ use of IMF credit. The basic rate of charge is set as a proportion of the SDR interest rate, which is equivalent to the effective interest rate. For financial year 2004, the basic rate of charge was 132 percent of the SDR interest rate. The basic rate of charge is increased to offset the effect on the IMF’s income of the nonpayment of charges and to finance the additions to the SCA-1. The average adjusted rate of charge before applicable surcharges for financial year 2004 was 2.17 percent (for financial year 2003 the average rate was 2.74 percent). A surcharge progressing from 300 to 500 basis points above the rate of charge applies to use of credit under the SRF. In addition, credit outstanding in excess of 200 percent of quota, resulting from purchases after November 28, 2000 in the credit tranches and under the EFF (other than those under the SRF), is subject to a surcharge of 100-200 basis points. Special charges are levied on members’ currency holdings that are not repurchased when due and on overdue charges. Special charges do not apply to members that are six months or more overdue to the IMF. A service charge is levied by the IMF on all purchases, except reserve tranche purchases. A refundable commitment fee is charged on Stand-By and Extended Arrangements. At the expiration or cancellation of an arrangement, the unrefunded portion of the commitment fee is taken into income.
The IMF pays interest, referred to as remuneration, on a member’s reserve tranche position. The rate of remuneration, which is equivalent to the effective interest rate, is equal to the SDR interest rate, adjusted downward to finance a share of the nonpayment of charges and additions to the SCA-1. The average adjusted rate of remuneration for the financial year ended April 30, 2004 was 1.48 percent (1.96 percent for the financial year ended 2003). A portion of the reserve tranche is unremunerated and is equal to 25 percent of the member’s quota on April 1, 1978—that part of the quota that was paid in gold prior to the Second Amendment of the Fund’s Articles. For a member that joined the Fund after that date, the unremunerated reserve tranche is the same percentage of its initial quota as the average unremunerated reserve tranche was as a percentage of the quotas of all other members when the new member joined the Fund. The unremunerated reserve tranche remains fixed for each member in nominal terms, but because of subsequent quota increases, it is now significantly lower when expressed as a percentage of quota. The average is equal to 3.8 percent of quota at April 30, 2004 and 2003, but the actual percentage is different for each member.
Pension and Other Post-Retirement Obligations
The IMF operates two defined-benefit pension plans and provides postretirement benefits to retired staff.
The pension plans are funded by payments from the staff and the IMF, taking into account the recommendations of independent actuaries. Assets of the plans are held in separate trustee-managed funds and are measured at fair value as of the balance sheet date. Pension obligations are measured using the Projected Unit Credit Method, which measures the present value of the estimated future cash outflows, using interest rates of government securities that have maturities approximating the terms of the pension liabilities.
The assets set aside for the provision of post-retirement benefits are held in an investment account administered by the IMF. This account is funded by contributions from the IMF. The expected costs of the post-retirement medical and life insurance benefits are accrued over the period of employment using the Projected Unit Credit Method. Valuations of these obligations are carried out by independent actuaries.
The pensions and other post-retirement benefits expense recognized include the actuarial gains and losses in excess of a 10 percent corridor which is amortized over the estimated service life remaining of IMF staff. The 10 percent corridor is the higher of 10 percent of the defined benefit obligation or the fair value of assets.
When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.
Accounting and Reporting Developments
In December 2003, the International Accounting Standards Board issued International Accounting Standard 32 “Financial Instruments: Disclosure and Presentation,” (IAS 32 revised). This standard clarifies, among other things, the definition of a financial liability, particularly as it relates to shareholder interests that have redemption features. The Fund will consider the implications of this revision for presentation of the balance sheet of the General Department. IAS 32 revised is effective for annual periods beginning on or after January 1, 2005, and will thus be effective for the Fund’s Financial Year 2006.
3. Credit Outstanding
Credit outstanding in the General Resources Account and SAF loans in the SDA are carried at amortized cost which is historical cost.
Changes in the outstanding use of IMF credit under the various facilities of the GRA during the years ended April 30, were as follows:
|April 30, 2002||Purchases||Repurchases||April 30, 2003||Purchases||Repurchases||April 30, 2004|
|In millions of SDRs|
|Extended Fund Facility||15,491||1,451||(2,000)||14,942||1,132||(2,323)||13,751|
|Total credit outstanding||52,081||21,681||(7,784)||65,978||17,813||(21,638)||62,153|
The IMF approved the following requests to extend the repurchase expectations by one year during financial years ended April 30:
|In millions of SDRs|
|Papua New Guinea||26||-|
|Serbia and Montenegro||19||-|
During financial year 2004, the IMF also approved, under its exceptional access policy, a three-year Stand-By Arrangement with Argentina for SDR 9 billion and augmented Brazil’s Stand-By Arrangement by SDR 4.5 billion.
As of April 30, 2004 and 2003, SDA loans amounted to SDR 86 million and SDR 137 million, respectively, and interest due from members in arrears, computed at 0.5 percent a year, amounted to SDR 1 million.
Scheduled repurchases in the GRA and repayments of SAF loans in the SDA are summarized below:
|In millions of SDRs|
|2009 and beyond||1,274||-|
The use of credit in the GRA by the largest users at April 30, was as follows:
|In millions of SDRs and as a percent of total GRA credit outstanding|
|Largest user of credit||18,139||29.2%||18,192||27.6%|
|Three largest users of credit||44,020||70.8%||45,382||68.8%|
|Five largest users of credit||53,680||86.4%||56,127||85.1%|
The five largest users of credit as of April 30, 2004 were Brazil, Turkey, Argentina, Indonesia, and the Russian Federation. Outstanding credit, by member, is provided in Schedule 1. The concentration of GRA outstanding credit by regional geographical area as of April 30, was as follows:
|In millions of SDRs and as a percent of total GRA credit outstanding|
|Asia and Pacific||8,019||12.9%||8,742||13.3%|
|Latin America and the Caribbean||30,697||49.4%||30,824||46.7%|
|Middle East and Turkey||15,880||25.5%||16,957||25.7%|
At April 30, 2004 and 2003, four members were six months or more overdue in settling their financial obligations to the General Department.
GRA repurchases, GRA charges, SAF loan repayments, and SAF interest that are six or more months overdue to the General Department were as follows:
|In millions of SDRs|
|Overdue for six months or more||743||726||1,001||982|
|Overdue for three years or more||650||663||939||900|
The type and duration of the overdue amounts in the General Department as of April 30, 2004, were as follows:
|In millions of SDRs|
Changes in the IMF’s holdings of members’ currencies for the years ended April 30, 2004 and 2003 were as follows:
|April 30, 2002||Net Change||April 30, 2003||Net Change||April 30, 2004|
|In millions of SDRs|
|Members’ outstanding use of IMF credit in the GRA||52,081||13,897||65,978||5,153||62,153|
|Members’ reserve tranche positions in the GRA||(55,327)||(12,682)||(68,009)||(3,825)||(62,856)|
|Administrative currency balances||(4)||(3)||(1)||(4)||(5)|
Receivables and payables arising from valuation adjustments at April 30, 2004, when all holdings of currencies of members were last revalued, amounted to SDR 9,311 million and SDR 3,139 million, respectively (SDR 20,947 million and SDR 4,985 million, respectively, at April 30, 2003). Settlements of these receivables or payables are required to be made promptly after the end of each financial year.
Other currency holdings, other than those resulting from the use of credit or usable currencies, amounted to SDR 46,672 million (SDR 47,692 million as of April 30, 2003).
5. Gold Holdings
At April 30, 2004 and April 30, 2003, the IMF held 3,217,341 kilograms of gold, equal to 103,439,916 fine ounces of gold, at designated depositories. As of April 30, 2004, the value of the IMF’s holdings of gold calculated at the market price was SDR 27.7 billion (SDR 25.2 billion at April 30, 2003).
6. Interest and Charges
As of April 30, 2004, the total holdings on which the IMF levies charges amounted to SDR 62,153 million (SDR 65,978 million as of April 30, 2003). Charges and other receivables due to the IMF as of April 30 were as follows:
|In millions of SDRs|
|Amount paid through burden sharing||(825)||(808)|
|Other unpaid charges||(188)||(188)|
Periodic interest and charges for the years ended April 30 consisted of the following:
|In millions of SDRs|
|Amounts paid through burden sharing adjustments, net of refunds||8||(28)|
|Total interest and charges||2,232||2,295|
Interest earned on SAF loans for the years ended April 30, 2004 and 2003 amounted to SDR 0.5 million and SDR 8.4 million, respectively.
Special charges, service charges, and the unrefunded commitment fees are included in Other Charges and Income, which amounted to SDR 91 million (SDR 132 million for the year ended April 30, 2003).
7. Fixed Assets
Other assets include fixed assets, which at April 30, 2004 and 2003 amounted to SDR 267 million and SDR 238 million, respectively, and consisted of:
|In millions of SDRs|
|Land and buildings||363||326|
|Total fixed assets||407||365|
|Less: accumulated depreciation||(140)||(127)|
|Net fixed assets||267||238|
As at April 30, 2004 the investments in the SDA consisted of fixed-term deposits with maturity of less than one year and amounted to SDR 2,631 million (SDR 2,590 million as at April 30, 2003). Fixed-term deposits include cash equivalents amounting to SDR 37 million (SDR 21 million as at April 30, 2003) comprising short-term deposits with maturities of less than ninety days.
Income of the SDA for the years ended April 30, 2004 and 2003, comprised of interest and special charges, was SDR 41 million and SDR 61 million, respectively.
At April 30, 2004, total creditor positions on which the IMF paid remuneration amounted to SDR 56,241 million (SDR 61,428 million at April 30, 2003). Remuneration for the years ended April 30, 2004 and 2003 consisted of the following:
|In millions of SDRs|
|Amount paid through burden sharing adjustment, net of refunds||(8)||28|
10. Burden Sharing and Special Contingent Account
Cumulative charges, net of settlements, that have resulted in adjustments to charges and remuneration since May 1, 1986, amounted to SDR 825 million at April 30, 2004 (SDR 810 million at April 30, 2003). The cumulative refunds for the same period, resulting from the settlements of overdue charges for which burden sharing adjustments have been made, amounted to SDR 1,073 million (SDR 1,072 million at April 30, 2003). The SCA-1 is financed by adjustments to the rate of charge and the rate of remuneration. Balances in the SCA-1 are to be distributed to the members that shared the cost of its financing when there are no outstanding overdue repurchases and charges, or at such earlier time as the IMF may decide. Losses arising from overdue obligations, if realized, would be shared by members in proportion to their cumulative contributions to the SCA-1. If the loss exceeded the balance in the SCA-1, the remainder would be charged to current income. At April 30, 2004, the balances held in the SCA-1 amounted to SDR 1,495 million (SDR 1,401 million at April 30, 2003).
Under the General Arrangements to Borrow (GAB), the IMF may borrow up to SDR 18.5 billion when supplementary resources are needed, in particular, to forestall or to cope with an impairment of the international monetary system. The GAB became effective on October 24, 1962, and has been renewed through December 25, 2008. Interest on borrowings under the GAB is set at a rate equal to the SDR interest rate.
Under the New Arrangements to Borrow (NAB), the IMF may borrow up to SDR 34 billion of supplementary resources. The NAB is the facility of first and principal recourse, but it does not replace the GAB, which will remain in force. Outstanding drawings and commitments under these two borrowing arrangements are limited to a combined total of SDR 34 billion. The NAB became effective for a five-year period on November 17, 1998, and has been renewed through November 16, 2008. Interest on borrowings under the NAB is payable to the participants at the SDR interest rate or any such higher rate as may be agreed between the IMF and participants representing 80 percent of the total credit arrangements.
12. Arrangements and Commitments in the General Department
An arrangement is a decision of the IMF that gives a member the assurance that the IMF stands ready to provide SDRs or usable currencies during a specified period and up to a specified amount, in accordance with the terms of the arrangement. Credit under these arrangements is subject to interest and charges that are uniform to all members and that reflect the cost to the IMF of financing such credit, plus a margin. In addition, certain surcharges may apply. At April 30, 2004, the undrawn balances under the 13 arrangements that were in effect in the GRA amounted to SDR 19,799 million (SDR 23,620 million under 18 arrangements at April 30, 2003).
The IMF has committed to lease commercial office space through 2005. Expenditures totaling SDR 18.1 million will be incurred over this period.
13. Administrative Expenses
The administrative expenses for the years ended April 30, were as follows:
|In millions of SDRs|
|Pension and other related expenses||39||79|
|Less: reimbursement for the administration of the SDR Department||(1)||(2)|
|Total administrative expenses, net of reimbursements||549||607|
The majority of these expenses are incurred in U.S. dollars; exchange gains and losses incurred in the normal course of business are reflected in administrative expenses and are not significant.
The GRA is reimbursed for the cost of administering the SDR Department.
The GRA is to be reimbursed annually for expenses incurred in administering the SDA and the PRGF Trust. Following the establishment of the SRF and CCL and the consequent increase in net operational income, the Executive Board decided to forgo reimbursement of the expenses incurred in administering the PRGF Trust for financial years 2004 and 2003 and to transfer the amounts that would otherwise have been reimbursed to the GRA from the PRGF Trust Reserve Account, through the SDA, to the PRGF-HIPC Trust. These transfers amounted to SDR 57.7 million for financial year 2004 (SDR 64.0 million for financial year 2003).
14. Pension and Other Post-Retirement Benefits
The IMF has a defined-benefit Staff Retirement Plan (SRP) that covers substantially all eligible staff and a Supplemental Retirement Benefits Plan (SRBP) for selected participants of the SRR. Participants contribute 7 percent of their pensionable remuneration and the IMF contributes the remainder of the cost of funding the plans and pays certain administrative costs of the plans. In addition, the IMF provides other employment and postretirement benefits, including medical, life insurance, and other long-term benefits. In 1995, the IMF established a separate account, the Retired Staff Benefits Investment Account (RSBIA), to hold and invest resources set aside to fund the cost of the post retirement benefits.
A plan amendment was adopted in December 2002, and implemented in financial year 2004, to allow certain periods of past employment to qualify for determination of participants’ benefits in the SRP and the SRBR. The estimated liability resulting from the amendment was included in the actuarial valuation (SDR 32 million) for financial year 2003.
The obligations of the SRR SRBR and RSBIA are valued annually by independent actuaries. The latest actuarial valuations were carried out as at April 30, 2004 using The Projected Unit Credit Method. The key assumptions used are as shown below.
The amounts recognized in the balance sheet are determined as follows:
|In millions of SDRs|
|Fair value of plan assets||2,939||2||323||3,264||2,747|
|Present value of the defined benefit obligation||(2,848)||(201)||(520)||(3,569)||(2,454)|
|Unrecognized actuarial losses/(gains)||716||52||(34)||734||99|
|Unrecognized prior service cost||-||-||14||14||43|
|Net balance sheet asset/(liability)||807||(147)||(1217)||443||435|
The movement in the net balance sheet asset is reconciled as follows:
|in millions of SDRs|
|Beginning of year||774||(122)||(217)||435||470|
|Income/(expense) recognized in income statement||15||128)||(38)||(51)||(79)|
|End of year||807||(147)||(217)||443||435|
The expense recognized in the income statement for the year ended April 30, 2003 included SDR 40 million which represents the effect of a change in the actuarial cost resulting from a revision in some participants’ data. This expense related for the most part to the present value of the defined benefit obligation as originally estimated when International Accounting Standard (IAS) 19 was introduced in financial year 2000. The amounts recognized in the income statements are as follows:
|In millions of SDRs|
|Current service cost||51||5||39||95||106|
|Expected loss on assets||(204)||-||(22)||(226)||(274)|
|Amortization of actuarial (gain)/loss||-||(2)||(6)||(8)||2|
|Prior service cost||14||18||1||33||42|
|Total (income) /expense recognized in income statement||(15)||28||38||51||79|
|Actual return on assets/(loss)||609||-||59||668||(72)|
The principal actuarial assumptions used were as follows:
|Expected return on plan assets||7.5||8.3|
|Future salary increases||6.4-10.8||4.0-6.75|
|Ultimate health care costs growth rates||4.0||4.0|
Schedule 1. General Department: Quotas, IMF’s Holdings of Currencies, Reserve Tranche Positions, and Members’ Use of Resources as at April 30, 2004
|General Resources Account|
|IMFs holdings of currencies1||Reserve tranche position||GRA||PRGF|
|Percent of quota||Amount||Percent2||SDA3||Trust4||Total5|
|Member||Quota||Total||(A)||+||(B)||+ (C)||= (D)|
|Afghanistan, Islamic State of||161,900||161,916||100.0||-||-||-||-||-||-|
|Antigua and Barbuda||13,500||13,499||100.0||6||-||-||-||-||-|
|Armenia, Republic of||92,000||99,036||107.6||-||7,031||0.01||-||132,350||139,381|
|Bahrain, Kingdom of||135,000||65,075||48.2||69,955||-||-||-||-||-|
|Belarus, Republic of||386,400||398,083||103.0||20||11,683||0.02||-||-||11,683|
|Bosnia and Herzegovina||169,100||260,637||154.1||-||91,533||0.15||-||-||91,533|
|Central African Republic||55,700||55,547||99.7||159||-||-||-||23,656||23,656|
|Congo, Democratic Republic of||533,000||533,000||100.0||-||-||-||-||500,067||500,067|
|Congo, Republic of||84,600||93,332||110.3||536||9,253||0.01||-||6,948||16,201|
|Croatia, Republic of||365,100||364,943||100.0||159||-||-||-||-||-|
|Estonia, Republic of||65,200||65,195||100.0||6||-||-||-||-||-|
|Iran, Islamic Republic of||1,497,200||1,497,204||100.0||-||-||-||-||-||-|
|Kazakhstan, Republic of||365,700||365,700||100.0||5||-||-||-||-||-|
|Lao People’s Democratic Republic||52,900||52,900||100.0||-||-||-||-||28,091||28,091|
|Latvia, Republic of||126,800||128,668||101.5||55||1,906||-||-||-||1,906|
|Lithuania, Republic of||144,200||168,337||116.7||16||24,150||0.04||-||-||24,150|
|Macedonia, former Yugoslav Republic of||68,900||88,595||128.6||—6||19,693||0.03||-||22,038||42,331|
|Micronesia, Federated States of||5,100||5,100||100.0||1||-||-||-||-||-|
|Moldova, Republic of||123,200||185,075||150.2||5||61,875||0.10||-||27,720||89,595|
|Papua New Guinea||131,600||207,027||157.3||398||75,819||0.12||-||-||75,819|
|Poland, Republic of||1,369,000||850,151||62.1||518,851||-||-||-||-||-|
|S.L. Kitts and Nevis||8,900||8,819||99.1||82||-||-||-||-||-|
|St. Vincent and the Grenadines||8,300||7,800||94.0||500||-||-||-||-||-|
|San Marino, Republic of||17,000||12,900||75.9||4,101||-||-||-||-||-|
|São Tome and Principe||7,400||7,403||100.0||—6||-||-||-||1,902||1,902|
|Serbia and Montenegro||467,700||1,051,273||224.8||-||583,559||0.94||-||-||583,559|
|Slovenia, Republic of||231,700||142,006||61.3||89,700||-||-||-||-||-|
|Syrian Arab Republic||293,600||293,603||100.0||5||-||-||-||-||-|
|Tajikistan, Republic of||87,000||87,000||100.0||2||-||-||-||76,960||76,960|
|Timor—Leste, The Democratic Republic of||8,200||8,200||100.0||1||-||-||-||-||-|
|Trinidad and Tobago||335,600||209,732||62.5||125,873||-||-||-||-||-|
|Turkmenistan, Republic of||75,200||75,200||100.0||5||-||-||-||-||-|
|United Arab Emirates||611,700||395,011||64.6||217,301||-||-||-||-||-|
|Uzbekistan, Republic of||275,600||300,538||109.0||5||24,938||0.04||-||-||24,938|
|Venezuela, República Bolivariana de||2,659,100||2,337,199||87.9||321,902||-||-||-||-||-|
|Yemen, Republic of||243,500||281,238||115.5||13||37,750||0.06||-||225,550||263,300|
Schedule 2. General Department: Financial Resources and Liquidity Position in the General Resources Account as at April 30, 2004 and 2003
|Less: Non-Usable Resources2||115,631,796||120,427,867|
|of which: Credit Outstanding||62,152,682||65,977,977|
|Equals: Usable Resources3||103,767,940||97,991,381|
|Less: Undrawn balances under GRA arrangements4||19,799,322||23,620,403|
|Equals: Uncommitted usable resources||83,968,618||74,370,978|
|Plus: Repurchases one year forward5||6,940,396||19,066,175|
|Less: Prudential balance6||32,828,720||32,612,340|
|Equals: One year forward commitment capacity (FCC)7||58,080,294||60,824,813|
|Resources available under borrowing arrangements||34,000,000||34,000,000|
|Quotas of members that finance IMF transactions||164,143,600||163,061,700|
|Net uncommitted usable resources8||75,051,056||60,589,269|
Schedule 3. General Department: Status of Arrangements as at April 30, 2004
|Member||Date of Arrangement||Expiration||Total Amount Agreed||Undrawn Balance|
|General Resources Account|
|Argentina||September 20, 2003||September 19, 2006||8,981,000||4,810,000|
|Bolivia||April 2, 2003||June 15, 2004||85,750||21,430|
|Brazil||September 6, 2002||March 31, 2005||27,375,1201||10,175,482|
|Colombia||January 15, 2003||January 14, 2005||1,548,000||1,548,000|
|Dominican Republic||August 29, 2003||August 28, 2005||437,800||306,460|
|Jordan||July 3, 2002||July 2, 2004||85,280||74,620|
|Macedonia, former Yugoslav Republic of||April 30, 2003||June 15, 2004||20,000||8,000|
|Paraguay||December 15, 2003||March 31, 2005||50,000||50,000|
|Turkey||February 4, 2002||February 3, 2005||12,821,200||1,360,800|
|Ukraine||March 29, 2004||March 28, 2005||411,600||411,600|
|Uruguay||April 1, 2002||March 31, 2005||2,128,3002||559,200|
|Total Stand-By Arrangements||53,944,050||19,325,592|
|Serbia and Montenegro||May 14, 2002||May 13, 2005||650,000||350,000|
|Sri Lanka||April 18, 2003||April 17, 2006||144,400||123,730|
|Total Extended Arrangements||794,400||473,730|
|Total General Resources Account||54,738,450||19,799,322|
1301 K Street NW
Washington DC 20005
Telephone (202) 414 1000
Facsimile (202) 414 1301
Report of Independent Auditors
To the Board of Governors of the International Monetary Fund:
In our opinion, the accompanying balance sheets and the related statements of income and cash flows give a true and fair view of the financial condition of the SDR Department of the International Monetary Fund (the “IMF”) as at April 30, 2004 and 2003, and its results of operations and cash flows for the years then ended in conformity with International Financial Reporting Standards. These financial statements are the responsibility of the IMF’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with International Standards on Auditing, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 176 to 181 is presented for purposes of adding additional analysis and is not a required part of the basic financial statements. The supplementary information has been subjected to the auditing procedures applied in the audits of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole.
June 7, 2004
Balance Sheets as at April 30, 2004 and 2003
|Charges receivable||84,882||93,221||Interest payable||85,229||93,562|
|Overdue assessments and charges (Note 3)||88,933||85,849||Participants with holdings above allocations (Note 2)|
|Participants with holdings below allocations (Note 2)||Less: allocations||9,594,484||9,465,384|
|Allocations||11,838,846||11,967,946||Holdings in excess of allocations||7,173,288||6,505,873|
|Less: SDR holdings||3,365,861||3,953,068||Holdings by the General Resources Account||506,029||962,641|
|Allocations in excess of holdings||7,972,985||8,014,878||Holdings of SDRs by prescribed holders||382,254|