Appendix IV: Relations with Other International Organizations
- International Monetary Fund
- Published Date:
- October 2004
Amid 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 (CFT) 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 Cancún, 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 Cancún 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 0. 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 0. 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. Ani-nat’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.