- International Monetary Fund. Secretary's Department
- Published Date:
- November 1993
Statement by the President of the World Bank Group, Lewis T. Preston
Change has been the theme of these meetings. Our Chairman set the tone by speaking of the dramatic transformation unfolding in Hungary— and throughout Eastern Europe and the former Soviet Union. From the Middle East, to South Africa, to Southeast Asia, the story is similar.
In the short time since we began to assemble here in Washington:
Mr. Mandela has called for the removal of sanctions from his country;
The international community has moved quickly to respond to the historic opportunity created by peace in the Middle East and—as you know—a major donors’ meeting will take place tomorrow; and
Viet Nam is on the way to clearing its arrears with the IMF—paving the way for renewed support from the Bretton Woods institutions.
These are changes on which solid development progress can be built. We should feel encouraged by them. But at the same time, we know that more needs to be done. I would like to focus on one issue in particular: trade. Expanded access to global markets is important for growth—and for jobs—in every country. Trade—even more than aid— is especially important for the developing countries. Over the last several years, in the context of their economic reform programs, many developing countries have reduced their trade barriers. The industrial nations have simply not kept pace. This must change. A successful conclusion to the Uruguay Round is the best way to effect that change.
As much as any event in the post-cold war era, the world’s long-run economic health depends on the Uruguay Round. A failure to complete it—and as Mr. Sutherland has emphasized, there is precious little time left—would be a major step in precisely the wrong direction: preserving yesterday’s economic structures at the expense of tomorrow’s jobs— and, to a great extent, at the expense of development. We simply must finish the Uruguay Round this year.
I stressed in my opening statement that North American Free Trade Agreement (NAFTA) is also imperative. We all know that protectionism is a horrible mistake. And NAFTA—like the Uruguay Round—is a referendum on protectionism. Let us be guided by sound economics and by reason—not by fear and demagoguery.
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I also observed in my opening remarks that the World Bank has changed. As I listened to Governors’ statements here and in our individual meetings, I was encouraged to hear their broad endorsement for the Bank’s new directions. Certainly, we will need to make further adjustments as we move forward to meet ever-increasing demands and different challenges. But you have recognized our renewed focus on poverty reduction; the emphasis on environmental sustainability; and the determination to improve implementation and get results on-the-ground. The Bank has become a more open institution. We are more accountable to you, our membership. And we are pursuing more participatory approaches in our operations. In short: we are well equipped to meet your needs now—and in the future.
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As we leave these meetings, we should realize that our discussions have raised expectations in the outside world. It is important that our pronouncements should now be followed by action. On that note, Mr. Chairman, I would like to thank you for your adept management of our discussion. And I congratulate the Governor of Bangladesh on his election as Chairman of next year’s meetings.
Statement by the Chairman of the Executive Board and Managing Director of the International Monetary Fund, M. Camdessus
It has been stimulating to hear the views of Governors about the problems, opportunities, and tasks that we face. You have been very clear about your concerns regarding the problems confronting the world economy.
First, weak growth and unemployment in the industrial countries. Governors from the developing and transforming countries underlined their concern about the impact on their own economies of the lackluster performance of the industrial world. Taken together with the protective barriers erected by industrial countries, this indeed forms a “grim external environment” for the developing and transforming countries, as the Governor for China said. And it is indeed natural to ask, along with the Governor for Indonesia: how long can the developing countries continue to be the engine for global growth? Revitalizing growth in the industrial countries is imperative for the whole world.
Second, the mixed performance and situation of the developing countries. Although the developing countries are at present the main engine for global growth, many Governors emphasized that the dynamism and success of the developing world are not nearly as widely based as they should be. Many countries have been left behind, and as the Governor for Japan emphasized, disparities within the developing world have greatly increased. The extreme poverty that exists in many countries is still the greatest problem faced by mankind. And for many low-income countries, debt remains a crushing burden.
Finally, the obstacles to stabilization and reform in the countries in transition. The Governors for both China and Russia emphasized the essential importance of macroeconomic stabilization for the success of reform. And the key role of structural reform was stressed by a number of Governors. The two are essential and intertwined.
I have been impressed by the realism with which Governors have not only acknowledged these problems, but have also identified the key requirements of the strategies with which they must be addressed.
Many Governors drew attention to the fact that we are living at a time of unusually profound and rapid change. This has a number of aspects, and it presents us with both challenges and opportunities. The greatest opportunities are provided by the technological and ideological changes that have been fostering globalization. As the Governor for Japan expressed it, the world has been moving toward a fully integrated economy based on market mechanisms. The end of the cold war and the “silent revolution” in the developing countries have brought a new consensus on the strategies required to meet our challenges, and I think this meeting has shown that in this respect the world is now close to speaking in a common language.
Meanwhile globalization and change present us with two major challenges, as many Governors have indicated. The first is to ensure that our economies are truly receptive and responsive to the changes occurring in the globalized market place. To be receptive to change, our economies must be open to the rest of the world. Many developing countries have in recent years opened their economies, and they have seen the benefits. It was gratifying to hear the Governor for India saying how the first two years of his country’s reform program has given India confidence to persevere determinedly on the path of reform; and it was equally encouraging to hear about the fruits of other countries’ efforts. But a broader opening is now required, and in this regard I was impressed by the appeals of just about all Governors for a successful conclusion of the Uruguay Round by the end of this year. As the Governor for the United Kingdom said, this would provide the biggest available noninflationary boost to growth in the world economy. For our economies to be responsive to change, rigidities in our economies must be removed through structural reforms. I was especially encouraged by the remarks of Governors from all parts of Europe regarding the importance of structural policies for a lasting reduction in unemployment to be achieved in their countries.
The second challenge presented by economic globalization is to ensure that our cooperation is as strong and effective as possible. This was emphasized by a number of Governors. As the Governor for Germany put it: despite the essential efforts of each individual country to “keep its own house in order,” we will only be able to deal effectively with the problems confronting us if we combine forces and work together in pursuit of joint solutions. And as you yourself put it in your opening remarks, Mr. Chairman, each of us must think globally while acting locally. As you said, cooperation is imperative to address the problems we face.
Our cooperation needs to encompass a wide range of efforts. Let me just mention three. First, I appreciate the expressions of support from Governors for our efforts to strengthen surveillance. Second, our global growth strategy needs to be strengthened. Many Governors from the industrial countries referred to the policies they need to undertake to fulfill their central responsibility for improving global growth performance. Apart from the structural reforms I have already mentioned, I welcome the emphasis placed on fiscal consolidation by a number of Governors. Third, more assistance must be directed to the low-income developing countries. As the Governor for Japan said, our continuous and tenacious support for the developing countries is crucial. Enhanced debt relief is needed for the low-income countries. And for the IMF, I would again emphasize the importance of establishing the enhanced structural adjustment facility (ESAF) successor and the advantages that would be gained from an SDR allocation. In my address on Tuesday, I referred to Africa as a sinking continent. The Fund has helped a number of African countries to arise from stagnation and regression. We are eager to continue making a contribution there, but it is abundantly clear that we can do so only with a new ESAF. I have been gratified by expressions of support for the ESAF successor from a number of Governors from industrial, developing, and transforming countries. It is now essential that all countries in a position to contribute come forward as quickly as possible.
Regarding the need for an SDR allocation, I made my views clear in my opening address. I would now only add one point. A number of Governors from developing countries have referred to the efforts they have made unilaterally in recent years to open up their economies to foreign trade. This process must continue. The SDR allocation I have proposed would help to support it.
Globalization and change call for enhanced cooperation. But globalization has also made cooperation easier. As I said earlier, these meetings have shown that the world now speaks to a large extent in a common language, and the opportunity to build the consensus for global solutions has increased as the need for it has grown. This encourages me to view the problems and challenges we face with cautious optimism, as long as we act with determination to address them, and to look forward with expectation to the year ahead, and to our meeting in Madrid.
Statement by the Chairman of the Boards of Governors and Governor of the Bank and the Fund for Hungary, Ivan Szabo
The 1993 Annual Meetings of the World Bank and the International Monetary Fund have drawn to a close. It has been a distinct honor and privilege for me, as a representative of the Hungarian Republic, to have had the opportunity to serve as your Chairman. I especially want to extend my appreciation to the President of the World Bank, Mr. Preston, and the Managing Director of the International Monetary Fund, Mr. Camdessus, for their essential contribution to the success of this gathering.
We can look back over the last few days with a sense of accomplishment. We hope to have begun to take a new road toward the international dialogue and cooperation that we know are essential to achieving our common goal of stable, noninflationary global economic growth, and a better standard of living for all. First of all, we hope that the industrial countries of the world will soon find the path to economic recovery and will take a lead in economic development again.
We must now rise to the great challenges of restructuring our home economies, restoring and increasing production and employment, and distributing more widely and equitably the fruits of our labors, while we work to protect the environment and lay a strong foundation for sustainable growth. We must now rise to seize the new opportunities that are clearly manifest in the aftermath of the cold war and the rapidly growing economic interdependence of nations.
First, the imperative of closer and more effective international economic cooperation and the importance of a comprehensive world economic strategy have been repeatedly emphasized by the speakers. These are all the more important because they can help the countries of the world attain economic growth that is both sustainable and efficient. Governors have called attention to the persistent problem of high unemployment worldwide. Our efforts must focus on ways to develop a strategy that emphasizes competitiveness and employment, a strategy that finds productive new uses for surplus labor.
Second, recent events in Central and Eastern Europe attest to the fact that social and political progress can be achieved only in tandem with economic stability and growth. In that respect, the effort to keep protectionism at bay is clearly in the interest of all countries. While global trade liberalization is essential for the industrial countries, it is a lifeline for all developing countries, especially the economies in transition. Having seen the collapse of the trade arrangements of the former Council for Mutual Economic Assistance (CMEA), the economies in transition are dependent on an export-led recovery to see them through the initial phase of their reform efforts. Although these countries have made significant strides in the direction of macroeconomic stabilization and reform, continued failure by the international community to secure a prompt and successful conclusion to the Uruguay Round could stifle— or even reverse—the progress achieved thus far.
Third, the Bretton Woods institutions must be given greater financial and political support. As we embark on the global cooperative strategy aimed at increased growth and better living standards for all, the Fund should be encouraged to continue to strengthen its surveillance efforts with respect to regional developments, so that the global community can identify and work together to address problems before they give rise to tensions in world markets.
I call on all members to support the IMF in its efforts to assist developing countries through the provision of policy advice, technical assistance, and finance. In particular, the Fund should be encouraged to continue to play a key role in the effort to support the transformation of formerly centrally planned economies, in particular through the use of the newly created systemic transformation facility, and to ensure their successful integration into the world economy. At the same time, cooperation among all members is needed to ensure the timely creation of a successor facility to the enhanced structural adjustment facility, which is desperately needed to help the low-income developing countries implement the macroeconomic and structural reform policies needed to strengthen their balance of payments positions, foster growth, and attract external financing.
We must all work together to solve the severe problems faced by countries that lack the reserves needed to gain entry into the international financial markets. An adequate SDR allocation is needed to allow the 38 countries that were not able to participate in previous SDR allocations to obtain a chance to catch up with the others. In addition, the burden of debt of many countries needs to be further alleviated.
We must also continue to strongly support the work of the World Bank Group as it contends with the growing demands of a substantially increased membership and the complex challenges of economic development. We applaud the continuing work that the Bank, International Development Association (IDA), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA) are undertaking in the fields of environmental protection, privatization and private sector development, health sector reform, human resource development, and institutional capacity building.
It has been forcefully brought home to us, over the past few days, that, although we share similar socioeconomic goals and agendas, our national experiences are very different, and they will require different solutions. The traditional school of thought and economic prescriptions are but a point of departure for the unique and creative solutions that each of our nations must fashion to meet the needs of the future.
In this milieu, the World Bank Group and the International Monetary Fund can bring together both the valuable experiences of other nations and the critical financial resources necessary to finance indigenous investments and to support transition programs. Let us continue to build on the common effort that we have advanced during these meetings. Let us work together to achieve a healthier and more balanced world economy in which poverty and environmental damage are matters of the past.
I hereby adjourn the 1993 Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.