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Appendix III: Press Communiqués of the Interim Committee and the Development Committee

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International Monetary Fund
Published Date:
September 1975
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Interim Committee of the Board of Governors on the International Monetary System

Press Communiqués

First Meeting, Washington, October 3, 1974

The Interim Committee of the Board of Governors on the International Monetary System held its inaugural meeting in Washington on October 3, 1974. The meeting was convened by Mr. Henri Konan Bédié, Chairman of the Board of Governors. Mr. John N. Turner, Minister of Finance of Canada, was selected as Chairman of the Committee for a period of two years. Mr. H. Johannes Witteveen, the Managing Director of the International Monetary Fund, participated in the meeting.

The members of the Committee had an exchange of views on the current situation and the prospects for the year ahead as it related to the business of the Committee.

The Committee reviewed the problem of recycling, and agreed to ask the Executive Directors to consider in this context, as a matter of urgency, the adequacy of existing private and official financing arrangements, and to report on the possible need for additional arrangements, including enlarged financing arrangements through the Fund, and to make proposals for dealing with the problem. The Committee also intends to discuss as a matter of priority the adjustment process, quotas in the Fund, and amendments of its Articles, including amendments on gold and the link, among other subjects.

The members of the Committee decided that their next meeting should take place on January 15-16, 1975, in Washington.

The terms of reference of the Committee are as follows:

“The Committee shall advise and report to the Board of Governors with respect to the functions of the Board of Governors in:

  • (i) supervising the management and adaptation of the international monetary system, including the continuing operation of the adjustment process, and in this connection reviewing developments in global liquidity and the transfer of real resources to developing countries;
  • (ii) considering proposals by the Executive Directors to amend the Articles of Agreement; and
  • (iii) dealing with sudden disturbances that might threaten the system.

In addition, the Committee shall advise and report to the Board of Governors on any other matters on which the Board of Governors may seek the advice of the Committee.

In performing its duties, the Committee shall take account of the work of other bodies having specialized responsibilities in related fields.”

Second Meeting, Washington, January 15—16,1975

1. The Interim Committee of the International Monetary Fund held its second meeting in Washington, D. C. on January 15 and 16, 1975. Mr. John N. Turner, Minister of Finance of Canada, was in the chair. Mr. H. Johannes Witteveen, Managing Director of the International Monetary Fund, participated in the meeting. The following observers attended during the Committee’s discussions of the matters referred to in paragraphs 2, 3, and 4 below: Mr. Henri Konan Bédié, Chairman, Bank-Fund Development Committee; Mr. Gamani Corea, Secretary General, UNCTAD; Mr. Wilhelm Haferkamp, Vice President, EC Commission; Mr. Mahjoob A. Hassanain, Chief, Economics Department, OPEC; Mr. Rene Larre, General Manager, BIS; Mr. Emile van Lennep, Secretary General, OECD; Mr. Olivier Long, Director-General, GATT; Mr. Robert S. McNamara, President, IBRD.

2. The Committee discussed the world economic outlook and against this background the international adjustment process. Great concern was expressed about the depth and duration of the present recessionary conditions. It was urged that antirecessionary policies should be pursued while continuing to combat inflation, particularly by countries in a relatively strong balance of payments position. It was observed that very large disequilibria persist not only between major oil exporting countries as a group and all other countries but also among countries in the latter group, particularly between industrial and primary producing countries. Anxiety was also voiced that adequate financing might not become available to cover the very large aggregate current account deficits, of the order of US$30 billion, in prospect for the developing countries other than major oil exporters in 1975.

3. The Committee agreed that the oil facility should be continued for 1975 on an enlarged basis. They urged the Managing Director to undertake as soon as possible discussions with major oil exporting members of the Fund, and with other members in strong reserve and payments positions, on loans by them for the purpose of financing the facility. The Committee agreed on a figure of SDR 5 billion as the total of loans to be sought for this purpose. It was also agreed that any unused portion of the loans negotiated in 1974 should be available in 1975. The Committee agreed that in view of the uncertainties inherent in present world economic conditions, it was necessary to keep the operation of the oil facility under constant review so as to be able to take whatever further action might be necessary in the best interests of the international community. It was also understood that during the coming months it would be useful to review the policies, practices, and resources of the Fund, since it would be appropriate to make increased use of the Fund’s ordinary holdings of currency to meet the needs of members that were encountering difficulties.

4. The Committee emphasized the need for decisive action to help the most seriously affected developing countries. In connection with the oil facility, the Committee fully endorsed the recommendation of the Managing Director that a special account should be established with appropriate contributions by oil exporting and industrial countries, and possibly by other members capable of contributing, and that the Fund should administer this account in order to reduce for the most seriously affected members the burden of interest payable by them under the oil facility.

5. The Committee considered questions relating to the sixth general review of the quotas of members, which is now under way, and agreed, subject to satisfactory amendment of the Articles, that the total of present quotas should be increased by 32.5 per cent and rounded up to SDR 39 billion. It was understood that the period for the next general review of quotas would be reduced from five years to three years. The Committee also agreed that the quotas of the major oil exporters should be substantially increased by doubling their share as a group in the enlarged Fund, and that the collective share of all other developing countries should not be allowed to fall below its present level. There was a consensus that because an important purpose of increases in quotas was strengthening the Fund’s liquidity, arrangements should be made under which all the Fund’s holdings of currency would be usable in accordance with its policies. The Committee invited the Executive Directors to examine quotas on the basis of the foregoing understandings, and to make specific recommendations as promptly as possible on increases in the quotas of individual member countries.

6. I. The Committee considered the question of amendment of the Articles of Agreement of the Fund. It was agreed that the Executive Directors should be asked to continue their work on this subject and, as soon as possible, submit for consideration by the Committee draft amendments on the following subjects:

(a) The transformation of the Interim Committee into a permanent Council at an appropriate time, in which each member would be able to cast the votes of the countries in his constituency separately. The Council would have decision-making authority under powers delegated to it by the Board of Governors.

(b) Improvements in the General Account, which would include (i) elimination of the obligation of member countries to use gold to make such payments to the Fund as quota subscriptions and repurchases and the determination of the media of payment, which the Executive Directors would study, and (ii) arrangements to ensure that the Fund’s holdings of all currencies would be usable in its operations under satisfactory safeguards for all members.

(c) Improvements in the characteristics of the SDR designed to promote the objective of making it the principal reserve asset of the international monetary system.

(d) Provision for stable but adjustable par values and the floating of currencies in particular situations, subject to appropriate rules and surveillance of the Fund, in accordance with the Outline of Reform.

II. The Committee also discussed a possible amendment that would establish a link between allocations of SDRs and development finance, but there continues to be a diversity of views on this matter. It was agreed to keep the matter under active study, but at the same time to consider other ways for increasing the transfer of real resources to developing countries.

7. The Committee also agreed that the Executive Directors should be asked to consider possible improvements in the Fund’s facilities on the compensatory financing of export fluctuations and the stabilization of prices of primary products and to study the possibility of an amendment of the Articles of Agreement that would permit the Fund to provide assistance directly to international buffer stocks of primary products.

8. There was an intensive discussion of future arrangements for gold. The Committee reaffirmed that steps should be taken as soon as possible to give the special drawing right the central place in the international monetary system. It was generally agreed that the official price for gold should be abolished and obligatory payments of gold by member countries to the Fund should be eliminated. Much progress was made in moving toward a complete set of agreed amendments on gold, including the abolition of the official price and freedom for national monetary authorities to enter into gold transactions under certain specific arrangements, outside the Articles of the Fund, entered into between national monetary authorities in order to ensure that the role of gold in the international monetary system would be gradually reduced. It is expected that after further study by the Executive Directors, in which the interests of all member countries would be taken into account, full agreement can be reached in the near future so that it would be possible to combine these amendments with the package of amendments as described in paragraphs 6 and 7 above.

9. The Committee agreed to meet again in the early part of June 1975 in Paris, France.

Third Meeting, Paris, June 10-11, 1975

1. The Interim Committee of the Board of Governors of the International Monetary Fund held its third meeting in Paris on June 10 and 11, 1975 under the chairmanship of Mr. John N. Turner, Minister of Finance of Canada. Mr. H. Johannes Witteveen, Managing Director of the International Monetary Fund, participated in the meeting. The following observers attended during the Committee’s discussions: Mr. Henri Konan Bédié, Chairman, Bank-Fund Development Committee; Mr. Gamani Corea, Secretary General, UNCTAD; Mr. Wilhelm Haferkamp, Vice President, EC Commission; Mr. Bahman Karbassioun, Advisor to the Secretary-General of OPEC; Mr. René Larre, General Manager, BIS; Mr. Emile van Lennep, Secretary General, OECD; Mr. F. Leutwiler, President, National Bank of Switzerland; Mr. Olivier Long, Director-General, GATT; Mr. Robert S. McNamara, President, IBRD.

2. The Committee received opinions, including that of the Managing Director, on the world economic outlook and its implications for the management of domestic policies and international financial relationships. The Committee agreed that external financing would remain for some time a critical problem for a number of countries and that its solution would require both maximum efforts on the part of such countries to enhance their creditworthiness and cooperative efforts in capital exporting countries to encourage the needed flows of financial resources.

3. The Committee noted that, in accordance with the consensus reached in the Committee at its January meeting, the Executive Directors of the Fund have decided to continue in 1975 the Fund’s oil facility and that in order to finance purchases under that facility, loans for substantial amounts have already been arranged with several oil exporting members and a number of other members in strong external positions. The Committee noted that negotiations would be continued in order to complete arrangements for the financing of the oil facility. The Committee welcomed the progress that has been made toward the establishment of a subsidy account to assist the members of the Fund most seriously affected by current conditions to meet the cost of using resources made available to them through the oil facility. The Committee welcomes the support pledged so far and urges other members to take similar action so that the account can be established as soon as possible. The Committee endorsed the decision of the Executive Directors to review all aspects of the facility in July 1975.

4. The Committee held a detailed discussion of the role of gold and there was widespread agreement that a solution would have to be based on the following broad principles:

(i) The objective should be an enhancement in the role of the SDR as the central asset in the international monetary system and, consequently, a reduction of the role of gold.

(ii) The official price of gold should be abolished.

(iii) Obligations to use gold in payments between the Fund and members should be abrogated.

(iv) There should be the sale of a portion of the Fund’s gold at the approximate market price for the benefit of developing members in general, and particularly those with low income, and the sale of another portion to members at the present official price.

(v) With respect to the rest of the Fund’s gold, there should be a range of broad enabling powers, exercisable with a high majority.

(vi) A reasonable formula should be found for understandings on transactions by monetary authorities with each other and in the market, which would include understandings that would be designed to avoid the re-establishment of an official price and would deal with the volume of gold held by monetary authorities.

(vii) An appropriate formula should be found for collaboration with the Fund in connection with the understandings among monetary authorities. Some countries felt that this collaboration should relate also to the reduction of the role of reserve currencies in the international monetary system.

The Committee was of the view that the Executive Directors should be asked to study the question of gold further in order that a final agreement can be reached on the basis of these principles.

The Executive Directors should study the establishment of a gold substitution account through which members would be able to exchange a part or all of their gold holdings for SDRs issued by the Fund for this purpose.

5. The Committee also discussed the exchange arrangements that members of the Fund should observe. There was widespread agreement that members should have a basic obligation to collaborate with the Fund and with other members in order to promote exchange stability, to maintain orderly exchange arrangements, and to pursue exchange policies that contribute to adjustment, and that the Fund should adopt policies in order to enable members to act consistently with their basic obligations whatever their exchange arrangements might be. The Committee reiterated its agreement that provision should be made for stable but adjustable par values and the floating of currencies in particular situations, subject to appropriate rules and surveillance of the Fund, in accordance with the Outline of Reform.

6. The Committee endorsed the principle of the improvement of the Special Drawing Account and the General Account and agreed that the Executive Directors should be asked to find agreed solutions on the few remaining issues. The Committee attached particular importance to the inclusion of effective provisions in the amended Articles under which the Fund’s holdings of the currencies of all members would be usable, in accordance with appropriate economic criteria, in its standard operations and transactions. It was agreed that the Executive Directors should study a power to invest a part of the Fund’s assets equal to its reserves for the purpose of raising income that would enable it to meet any administrative or operational deficits, and to report on this subject as soon as possible.

7. (a) It was agreed that a Council should come into being when a decision is taken by the Fund for that purpose under an appropriate amendment. The Council would strengthen the Fund by providing it with an organ composed in the same manner as the Committee of Twenty and the Interim Committee but with authority not only to exercise advisory functions but also to take decisions under specific powers. The Committee shares the view of the Executive Directors that, except for a few powers of a political or structural character that should be reserved to the Board of Governors, all powers of the Board of Governors should be delegable in principle to the Council, to the Executive Directors, or to both concurrently, by decisions of the Board of Governors.

(b) On the question of the majorities for the adoption of decisions of the Fund on important matters, it was agreed that an 85 per cent majority should be required under the amended Articles for those decisions that can be taken now by an 80 per cent majority.

(c) The Committee noted with approval the draft of an amendment by which amendments to the Articles would become effective when accepted by three fifths of the members having 85 per cent, instead of 80 per cent as at present, of the total voting power.

8. The Committee considered various proposals to assist members in dealing with problems arising from sharp fluctuations in the prices of primary products. In this connection, the Committee requested the Executive Directors to consider appropriate modifications of the Fund’s facilities on the compensatory financing of export fluctuations and on assistance to members in connection with their contributions to international buffer stocks. It was agreed that, after amendment, a member using the Fund’s buffer stock facility would be able to retain any portion of its reserves held in the form of a reserve position in the Fund; this provision now applies to drawings under the Fund’s compensatory financing facility.

9. The Committee considered the report of the Executive Directors on the progress made toward implementation of the understandings reached in the Committee last January with regard to increases in the quotas of members as a result of the Sixth General Review of Quotas. The Committee noted with satisfaction that progress had been made in reaching agreement on quota increases to be proposed for individual countries. The Committee agreed that for the quota increases proposed as a result of this review, and subject to the amendment of the Articles, members should be given an option to pay 25 per cent of the increase in quota (which in the past members have had to pay in gold) in special drawing rights (SDRs), the currencies of certain other members, subject to their concurrence, or in the paying member’s own currency. The question of payment in gold by agreement with the Fund would be settled as part of the provisions on gold. The balance of the increase in subscription would be paid, as in the past, in the paying member’s own currency. The Committee also recommended that there should be no obligation for a member to repurchase the amount of its own currency paid in excess of 75 per cent of the increase in its quota. The Executive Directors have been asked to prepare and submit as promptly as possible to the Board of Governors, for consideration at its annual meeting in September 1975, a resolution that will include proposed increases in the quotas of individual members and provisions on the payment of corresponding subscriptions on the basis of the understandings reached by the Committee.

10. The Committee agreed to meet again in Washington, D.C., immediately before the annual meeting of the Board of Governors. The Committee agreed to meet in Jamaica in January and expressed its gratitude to the Jamaican authorities for the invitation.

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

Press Communiques

First Meeting, Washington, October 2,1974

The Ministers of the Committee of Twenty on the Reform of the International Monetary System and Related Issues recommended at their meeting in June 1974 the establishment of a joint ministerial committee of the Fund and World Bank to carry forward the study of the broad question of the transfer of real resources to developing countries, and to recommend measures to be adopted in order to implement its conclusions. The Ministers further recommended that the joint ministerial committee should also give urgent attention to the problems of the developing countries most seriously affected by exceptional balance of payments difficulties in the current situation, bearing in mind the need for coordination with other international bodies. The Development Committe held its first meeting today.

Mr. Henri Konan Bédié, Governor from Ivory Coast, was elected Chairman. The Managing Director of the Fund and the President of the Bank participated in the meeting.

It was agreed that the immediate focus of the Committee’s work would be on the analysis of the situation of the most seriously affected developing and the least developed countries, and of measures to adjust to the new outlook for international commodity prices. Additional topics for the Committee’s consideration over the longer term were discussed, and the Executive Secretary who will be appointed shortly 1 will be asked to prepare a recommendation for a detailed work program.

Second Meeting, Washington, January 17,1975

1. The Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (the Development Committee) held its second meeting in Washington on January 17, 1975, under the Chairmanship of Mr. Henri Konan Bédié, Minister of Economy and Finance for Ivory Coast. The meeting was held in the headquarters building of the Pan American Health Organization. Mr. Robert S. McNamara, President of the International Bank for Reconstruction and Development, and Mr. Johannes Witteveen, Managing Director of the International Monetary Fund, took part in the meeting, which was also attended by Mr. Abdelwahab Labidi, President of the African Development Bank, Mr. Shiro Inoue, President of the Asian Development Bank, Mr. M. G. Mathur, Deputy Director-General of the GATT, Mr. Antonio Ortiz Mena, President of the Inter-American Development Bank, Mr. E. van Lennep, Secretary General of the OECD, Mr. Maurice Williams, Chairman of the DAC, Mr. Mahjoob Hassanain, Director of the Economics Department of OPEC, Mr. Gabriel van Laethem, Under Secretary General of the United Nations, and Dr. Raúl Prebisch, Under Secretary General of the United Nations Emergency Operation, Mr. Gamani Corea, Secretary General of UNCTAD, and Ambassador Paul Jolles of Switzerland.

2. The Committee received several reports presented by the Executive Secretary, Mr. Henry J. Costanzo, on the initial work program adopted at the inaugural meeting, related to the situation of the most seriously affected developing countries, measures to adjust to the new outlook in commodity prices, and the future work program of the Committee.

3. The members of the Committee engaged in a general exchange of views regarding the present situation and prospects of the developing countries. Members noted that many developing countries found themselves in serious difficulties as a result of substantial adverse changes in their terms of trade and an inadequate flow of external capital and were being forced to take adjustment measures in many cases harmful to their long-term economic and social development. The members recognized that this situation was likely to continue in the immediate future, and expressed their particular concern over the pressing difficulties in prospect for the poorest, and the most seriously affected of the developing countries.

The Committee agreed that the industrialized countries should seek to adopt such adjustment measures considered necessary in their circumstances in such a way as to avoid any reduction in the net flow of real resources to the developing countries, seeking to improve the conditions under which developing countries and international development finance institutions may have access to their capital markets, and to improve the real volume and the quality of official development assistance provided to the developing countries and should avoid trade restrictions that could negatively affect developing countries’ exports. The Committee also noted the importance of continued and expanded cooperation, particularly in the transfer of technology and management skills, between the industrialized and surplus oil-producing countries, in order to promote the development of the latter countries and thereby to assist the overall long-range adjustment process and also in order to promote the development of other developing countries.

The Committee recognized the important and increasing flow of resources being made available by the surplus oil-producing countries to the developing countries and to the international financial institutions. In welcoming such interest and participation on the part of these countries, the Committee agreed that these countries should seek to continue and expand this flow of resources, in accordance with their financial capacity to do so.

4. The Committee agreed that the situation of the most seriously affected countries requires urgent treatment, and that measures should be taken to cover the short-term requirements created by the present international situation. In this context, the Committee welcomed the action taken by the Interim Committee with respect to a continuation and expansion of an oil facility in the Fund and the establishment of a special account in order to reduce for the most seriously affected members the burden of interest payable by them. The Committee also reviewed several additional possible courses of action. It was agreed that the Executive Boards of the Bank and the Fund should be invited to study the desirability of creating a special trust fund that would provide, for the period immediately ahead, additional highly concessional resources to meet the requirements of the most seriously affected countries, and the possible modalities of such a fund.

5. The Committee invited the Executive Board of the Bank to undertake an immediate study of the concept of “third window” lending by the Bank on terms intermediate between those of the Bank’s regular loans and those of IDA’s concessional credits. The Committee welcomed the willingness expressed by some members to support and to provide financial resources for such a facility.

6. For its immediate work program, the Committee instructed the Secretariat to propose such measures as might be considered for early implementation to promote increased use of capital markets by developing countries, and to facilitate their access to such markets; to report to the Committee on an appropriate work program in response to the conclusions of the recent World Food Conference on the financing of food, fertilizer, and food production; and to review the adequacy of existing information systems on the flow of resources to the developing countries.

7. The Committee also agreed that the future work of the Committee should focus on the basic long-term needs of the developing countries and, in this connection, welcomed the intention of the President of the Bank to initiate urgently a study of the capital requirements of developing countries to maintain a reasonable rate of growth in per capita income for the remainder of the decade. The Committee instructed the Executive Secretary to initiate a broad and continuing review of the question of the transfer of real resources, using as a basis the work of the Committee of Twenty and taking into account the conclusions of the Bank’s study, in order to formulate recommendations as to how the required transfers of real resources might be met through existing or new financial mechanisms and arrangements, including arrangements for commodity price stabilization. The Committee welcomed the study to be undertaken by the Executive Directors of the Fund, as agreed by the Interim Committee, on the Fund’s facilities for compensatory financing and assistance to international buffer stocks of primary products.

8. The Committee was glad to note the announcements made at the meeting of actions which permit the full effectiveness of the IDA 4th replenishment, and urged sympathetic consideration of the proposals recently put forward by the IBRD for an increased program of normal Bank lending.

9. The Committee agreed to hold its next meeting in Paris during the first part of June 1975.

Third Meeting, Paris, June 12-13, 1975

The Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (the Development Committee) held its third meeting in Paris on June 12-13, 1975, under the chairmanship of Mr. Henri Konan Bédié, Minister of Economy and Finance for Ivory Coast. The meeting was held in the Centre de Conferences Internationales. Mr. Robert S. McNamara, President of the International Bank for Reconstruction and Development, Mr. H. Johannes Witteveen, Managing Director of the International Monetary Fund, and Mr. Henry J. Costanzo, Executive Secretary of the Development Committee, took part in the meeting, which was also attended by the following observers: Mr. Abdelwahab Labidi, President of the African Development Bank; Mr. Chedly Ayari, President of the Arab Bank for Economic Development in Africa; Mr. Saeb Jaroudi, President of the Arab Fund for Economic and Social Development; Mr. Shiro Inoue, President of the Asian Development Bank; Mr. Claude Cheysson, Member of the Commission of the European Communities; Mr. Maurice Williams, Chairman of the Development Assistance Committee; Mr. Yves Le Portz, President of the European Investment Bank; Mr. M. G. Mathur, Deputy Director-General of the GATT; Mr. Antonio Ortiz Mena, President of the Inter-American Development Bank; Mr. E. van Lennep, Secretary General of the OECD; Mr. Gabriel van Laethem, Under Secretary General of the United Nations; Mr. Gamani Corea, Secretary General of UNCTAD; and Ambassador Paul Jolles of Switzerland.

The Committee reviewed the present situation and the medium and long-term prospects of the developing countries, in the context of analyses prepared by the IMF on the short-term balance of payments outlook of developing countries, and a World Bank study on the capital requirements of developing countries to the end of this decade. The Committee noted with concern the continued deterioration of the position of most of the developing countries. The Committee broadly endorsed the conclusion of the World Bank study that, if the developing countries are to achieve adequate growth rates in the remaining years of the decade, they will require substantial increases in capital flows, both official and private, and that among other things they will have to undertake at the same time efforts to increase domestic resource mobilization and to expand exports. In particular, the Committee felt that the low-income countries faced a very difficult prospect and recommended that their requirements for concessional assistance should be met on a priority basis. The Committee agreed with the conclusions of the Bank study about the substantial additional requirements for external capital of the middle and high-income developing countries. Noting the conclusions of the IMF study that the balance of payments needs of the most seriously affected countries would continue to be large in 1975 and 1976, the Committee recommended urgent steps to meet these needs through existing and new mechanisms.

In the light of this situation, the Committee re-emphasized the urgency of improving the real volume and quality of official development assistance, both bilateral and multilateral, and reviewing its distribution with a view to improving the share for the poorer countries, and reaffirmed their commitment to support steps toward these ends in both the industrial and the surplus oil-producing countries. The Committee welcomed the decisions of some of its members to expand the volume and improve the quality of their assistance, but noted that the existing quantum of aid was still far below the 0.7 per cent of GNP target for the middle of the Second Development Decade. In this connection, the Committee noted that negotiations for the IDA 5th replenishment were scheduled to start later this year. In view of the requirement for additional capital by IDA recipients, it was agreed that a replenishment providing for an expansion in real terms would be most helpful.

The Committee agreed that in order to help achieve acceptable rates of growth for developing countries, there should be an expansion of the lending programs of the World Bank and the regional development banks, consistent with their capital structure and the availability of funds. The Committee urged that the capital base of the development finance institutions be reviewed.

In response to the serious difficulties faced by the developing countries, the Committee, as a first concrete step, decided to lend its unanimous support to the establishment for one year of a new intermediate lending facility in the World Bank (known as the “third window”) to lend on terms intermediate between those of IDA and of the World Bank. It further decided to urge the World Bank to proceed with its establishment in the fiscal year beginning July 1, 1975, in order to lend to the developing countries in that year up to $1 billion in assistance separate from other Bank operations. Since these funds will be limited, there will be need for eligibility criteria which will favor the developing countries with an annual per capita income of less than $375, but it was recognized that there was need to have some flexibility in the matter of the upper limit of the criteria. It was pointed out that the third window operations could also have some redistributive effect on other Bank Group financing, to both the poorest and the middle and higher-income developing countries. The Committee noted with satisfaction that 11 countries had offered contributions towards an interest subsidy fund from amongst industrial and oil-exporting countries. Some other countries indicated their likely support to this cooperative effort by some industrial and oil-exporting countries, in a multilateral framework, for the assistance of the developing countries in the present difficult situation but suggested some alternative ways of financing.

The Committee considered the report of the Executive Boards of the IBRD and IMF on proposals to create a special trust fund to be administered by the IMF to provide additional highly concessional resources to meet the balance of payments needs of low-income developing countries for the next few years. Some members of the Committee felt there was an urgent need for establishing such a fund as soon as possible. In order to facilitate early concrete action on a trust fund, the Committee agreed to urge the Executive Directors of the IMF to consider all aspects of the establishment of such a trust fund as well as to continue their study of all possible sources of financing.

It was appreciated that the magnitude of the flow of resources required by the developing countries was such that private capital flows must continue to play a substantial role in helping to meet the overall capital needs for development. The Committee noted the importance of measures to facilitate and expand the access of developing countries to capital markets and recommended expanded technical assistance to developing countries seeking such access. The Committee agreed to establish a working group to make a review of regulatory and other constraints affecting access to capital markets, and also to study further proposals to support developing countries’ access to private markets, including the use of multilateral guarantees. The Working Group should present a status report on progress at the next Committee meeting.

The Committee recognized that fluctuations in the prices and earnings of commodities which account for a major portion of the exports of developing countries can present severe problems to these countries both in their balance of payments and in the maintenance of development expenditures and investment levels. The Committee recognized the need for effective measures to reduce such fluctuations, which could make a significant contribution to development efforts. The Committee noted measures recently taken and others under consideration to help moderate fluctuations in commodity prices or export earnings including proposals to negotiate appropriate agreements. Many members urged the Bank, and the regional organizations, to study ways and means of assisting in the financing of commodity stabilization schemes, including buffer stock arrangements. Many members also expressed strong support for the Bank’s proposal to consider providing financing to the tin buffer stock. The Committee welcomed the request of the Interim Committee to the Executive Directors of the IMF to consider appropriate modifications in the terms of its compensatory financing facility and its buffer stock facility.

The Committee also noted that appropriate trade liberalization policies could provide very substantial benefits to the developing countries and expressed its earnest hope for maximum progress in trade liberalization during the ongoing multilateral trade negotiations.

The Committee took note of new institutional arrangements established as a result of the World Food Conference as well as of initial steps toward creation of the proposed International Fund for Agricultural Development.

It was agreed that the next meeting of the Committee would be held in Washington, D.C., in the first week of September, during the Annual Meetings of the Boards of Governors of the Bank and the Fund. It was also agreed to meet in January 1976, in Jamaica, in conjunction with the meeting of the Interim Committee.

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