Summary Proceedings of the Forty Fourth Annual Meeting of the Board of Governors 1989
Chapter

Reports of the Joint Procedures Committee

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1989
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ChairmanKorea
Vice ChairmenFederal Republic of Germany
Madagascar
Reporting MemberEcuador

Other Members: Belize, Bhutan, Egypt, Finland, France, Japan, Maldives, Mali, Mexico, Nigeria, St. Vincent, Saudi Arabia, Spain, Tanzania, United Arab Emirates, United Kingdom, United States, Yugoslavia.

Report II1

September 28, 1989

Mr. Chairman:

At the meeting of the Joint Procedures Committee held on September 27, 1989, the items of business on the agenda of the Board of Governors of the International Monetary Fund were considered.

The Committee submits the following report and recommendations:

1. 1989 Annual Report

The Committee noted that provision had been made for the annual discussion of the business of the Fund.

2. Report of the Chairman of the Interim Committee

The Committee noted the presentation made by the Chairman of the Interim Committee.2

The Committee recommends that the Board of Governors of the Fund thank the Interim Committee for its work.

3. Financial Statements, Report on Audit, and Administrative Budget

The Committee considered the Report on Audit for the financial year ended April 30, 1989, the Financial Statements contained therein (Fund Document No. 6 and Appendix IX of the 1989 Annual Report), and the Administrative Budget for the financial year ending April 30, 1990, and the Capital Budget for capital projects beginning in financial year 1990 (Fund Document No. 8 and Appendix VIII of the 1989 Annual Report).

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 7.3

Approved:

/s/ K.S. Lee/s/ J. Gallardo Zavala
Korea—ChairmanEcuador—Reporting Member

Report III1

September 28, 1989

Mr. Chairman:

The Joint Procedures Committee met on September 27, 1989 and submits the following report:

1. Development Committee

The Committee noted that the Annual Report of the 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) has been presented to the Boards of Governors of the Bank and the Fund pursuant to paragraph 5 of Resolutions Nos. 294 and 29-9 of the Bank and the Fund, respectively (Bank Document No. 3 and Fund Document No. 5).

The Committee recommends that the Boards of Governors of the Bank and the Fund note the report and thank the Development Committee for its work.

2. Officers and Joint Procedures Committee for 1989/90

The Committee recommends that the Governor for Kenya be Chairman, and the Governors for Denmark and Indonesia be Vice Chairmen, of the Boards of Governors of the Bank and its Affiliates and of the Fund, to hold office until the close of the next Annual Meetings.

It is further recommended that a Joint Procedures Committee be established to be available, after the termination of these Meetings and until the close of the next Annual Meetings, for consultation at the discretion of the Chairman, normally by correspondence and, if the occasion requires, by convening; and that this Committee shall consist of the Governors for the following members: Chile, Costa Rica, Denmark, Djibouti, France, Gabon, Germany, India, Indonesia, Japan, Kenya, Morocco, Nepal, Nigeria, Paraguay, Portugal, Saudi Arabia, St. Kitts and Nevis, Turkey, United Kingdom, United States, and the People’s Democratic Republic of Yemen.

It is recommended that the Chairman of the Joint Procedures Committee shall be the Governor for Kenya, and the Vice Chairmen shall be the Governors for Denmark and Indonesia, and that the Governor for Morocco shall serve as Reporting Member.

Approved:

/s/ K.S. Lee/s/ J. Gallardo Zavala
Korea—ChairmanEcuador—Reporting Member

Annex to Report III

September 25, 1989

Sir:

As Chairman of the 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), I have the honor to present herewith to the Boards of Governors a report by the Committee on the progress of its work during the period July 1988-June 1989. The report is presented in compliance with Section 5 (i) of the Bank Board of Governors Resolution No. 294 and the Fund Board of Governors Resolution No. 29-9, adopted on October 2, 1974.

Yours sincerely,

/s/

B.T.G. Chidzero

Chairman

Development Committee

Attachment

The Honorable

Kyu Sung Lee

Chairman of the Boards of Governors

International Monetary Fund and the World Bank Group

Attachment: Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries

(July 1988-June 1989)

I. Introduction

The Committee held three meetings during the period under review. Two meetings were convened in Berlin (West) on September 26 and September 29, 1988 and one in Washington, D.C. on April 4, 1989. The regular meetings on September 26, 1988 and April 4, 1989 were chaired by B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe. The meeting on September 29 was a short procedural one for the selection of a chairman. This meeting was chaired by Bengt Dennis, Chairman of the Board of Governors of the International Monetary Fund. Senior Minister Chidzero was re-elected for another term.

The meetings were conducted in the same format as in recent meetings, with a plenary session in the morning for general statements by members and an informal session in the afternoon for an in-depth discussion on selected aspects of the items on the agendas. A luncheon restricted to members was held at each regular meeting for a private exchange on a specific topic (the impact of the industrial policies of developed countries on the developing countries was discussed in September 1988 and the development dimensions of the debt problem in April 1989).

The Committee’s discussions were assisted by a number of background and issues papers prepared by the staffs of the IMF and the World Bank, as well as by the Chairman’s opening statements. Papers were also presented in advance by the following official observers to the Committee:

  • African Development Bank

  • General Agreement on Tariffs and Trade (GATT)

  • Inter-American Development Bank

  • International Fund for Agricultural Development

  • Islamic Development Bank

  • OPEC Fund for International Development

  • United Nations Conference on Trade and Development (UNCTAD)

II. International Economic Setting

The Committee’s discussions on development issues during the year took place against an international environment which, although more favorable, continued to pose difficulties for the developing countries. While growth in the industrial countries strengthened markedly benefiting many developing countries and world trade expanded at its fastest rate since 1984, the outlook of many developing countries remained a cause for concern. Fiscal and trade imbalances as well as structural problems of the industrial countries continued to require correction to ensure the sustainability of long-term growth essential to the prospects of the developing countries. Growth rates in developing countries had fallen from an average of 5.4 percent a year during 1973-80 to 3.9 percent for 1980-87 and were expected to remain weak over the medium term. Economic activity was uneven with high growth in most of Asia and continued stagnation in many of the highly indebted countries of Latin America. In sub-Saharan Africa real per capita GDP continued to fall but there were encouraging signs of economic improvement in countries adopting economic reform programs. Protectionist and trade policies continued to adversely affect many developing countries and the successful outcome of trade negotiations in the Uruguay Round was considered to be of crucial importance. Between 1980 and 1988 nonfuel commodity prices relative to industrial countries’ export prices of manufactured goods declined by about 20 percent although there has been an improvement in the prices of some commodities exported by developing countries in 1988. Development prospects of the severely indebted countries were unfavorably affected by the low level of investment, little improvement in debt-service ratios, and high real rates of interest. There has been a declining trend in net financial flows to developing countries, although since 1987 flows appear to have stabilized. Resource transfers, especially for the highly indebted middle-income countries, dropped sharply since 1982 and became negative for several of them.

III. International Development Issues

The agendas for the Development Committee were determined in the light of the current international development situation and issues outlined above. The Committee had extensive discussions during the year on the following pressing development issues confronting the developing countries:

  • (1) International debt problems.

  • (2) Development in sub-Saharan Africa.

  • (3) Structural adjustment.

  • (4) The industrial policies of the developed countries.

  • (5) Poverty.

  • (6) Environment and development.

  • (7) Transfer of resources.

These issues are closely interrelated but the Committee focused attention on particular topics in its agendas. Communiqués of Committee meetings during the year setting out the conclusions reached by members in their discussions on each of these issues are appended to this report. The following provides a brief summary of the progress of the Committee’s work in dealing with these development issues.

1. International Debt Problems

(a) Low-income indebted countries

The problem of low-income indebted countries has for some time been a critical issue under discussion in the Committee. In April 1987, the Committee agreed that additional efforts were required to ease the burden of the debt-distressed low-income countries. Creditors and debtors were urged to consider measures to achieve this objective, including, where possible, interest rate reduction in official reschedulings or alternative measures having a similar impact. In this context, the Committee welcomed in September 1988 the consensus reached at the Toronto economic summit in June 1988 and the arrangements worked out by the Paris Club on the framework of comparability between various options providing additional debt relief. The Committee also called on developed donor countries in a position to do so to convert loans into grants for the poorest countries undertaking appropriate growth-oriented adjustment programs or to adopt measures with a similar effect such as increasing grants and the concessionality of their ODA.

In the spring of 1989, the Committee welcomed the implementation by the Paris Club of the agreement to provide concessional debt rescheduling including debt and interest rate reduction to low-income debt-distressed countries undertaking adjustment programs. The Committee also agreed, at its spring 1989 meeting to work toward continuation of the collaborative framework for donor action developed under the Special Program of Assistance (SPA) coordinated by the Bank, which should include examination of possible additional measures to address economic and debt problems of these countries.

(b) Development prospects for the middle-income heavily indebted countries and the debt strategy

As mandated at its previous meeting, the Committee in April 1989 continued to review the debt strategy so as to enhance the prospects for growth and development. The Committee expressed its concern at the low level of investment, high debt-service ratio, and low growth rates in the middle-income heavily indebted countries. Debtors and creditors were encouraged by the Committee at its September 1988 meeting to broaden the menu of market-based and voluntary-negotiated options, blending new money, where appropriate, with techniques which have the effect of reducing the stock of ebt without transferring risks from private to official creditors. The role of the Bank and the Fund in facilitating developments in the menu approach, thereby catalyzing financial support for a growth-oriented debt strategy, was reaffirmed.

Given the continued stagnation in growth in many debtor countries, the Committee stressed the importance of increasing the level of investment in these countries so as to improve their development prospects. In April 1989, the Committee welcomed proposals by France, Japan, and the United States to review and strengthen the current strategy through stronger emphasis on a broader-based approach to voluntary debt and debt-service reduction, new investments, adjustment measures, repatriation of flight capital, and new lending by commercial banks. There was also agreement by the Committee that the World Bank and the IMF, as part of their support for adjustment programs, should provide support for voluntary, market-based debt reduction transactions. To this end it was agreed that both institutions should set aside a portion of their policy-based financing to support debt reduction operations. As well, the institutions were requested to examine the possibility of limited interest support for transactions involving significant debt or debt-service reduction. The Bank and the Fund were called on to develop and implement specific proposals to achieve these objectives.

(c) Other groups of severely indebted countries

In its review of the international debt situation, the Committee also concluded that the development needs of low- and lower middle-income countries whose debts are mainly to official creditors should be given special attention.

The Committee directed that the evolving debt strategy and its impact on development prospects should continue to be discussed at its meeting to be held in September 1989, supported by appropriate analyses covering all indebted countries.

2. Development in Sub-Saharan Africa

In September 1988, the Committee requested the Bank and the Fund to present a progress report on various initiatives intended to benefit sub-Saharan Africa. On the basis of a report prepared by the Bank and the Fund, the Committee at its meeting in April 1989 noted recent positive economic developments, particularly in countries undertaking adjustment programs within the framework of the Special Program of Assistance of the World Bank and the structural adjustment facilities of the IMF. It encouraged those countries to persevere in the adjustment effort. The Committee looked forward to continuation of the collaborative framework for donor action developed under the SPA and coordinated by the Bank, as well as the examination of further measures to deal with the economic and debt problems of these countries (see Section III(a) of this report). Bilateral donors and multilateral agencies were urged to speed up commitments and disbursements in the SPA. The Committee also concluded that the international community should work toward facilitating external financial support to African governments’ adjustment efforts in the period beyond 1990. The Committee encouraged adequate investment financing and technical assistance to supplement quick-disbursing assistance to help deal with the longer-term problems of sub-Saharan Africa.

3. Structural Adjustment

At its April 4, 1989 meeting, the Committee initiated the first global review, at ministerial level, of experience with growth-oriented structural adjustment programs assisted by the Bank and the Fund. The focus at that meeting was mainly on the design and implementation of programs. The Committee concluded that while results varied, structural adjustment programs adopted by developing countries have generally helped to make their economies more efficient and lay the foundation for the resumption of growth. The Committee identified five essential ingredients for structural adjustment programs: programs owned by governments with political commitment to sound macro-economic policies, broad public understanding of programs, integration of poverty-reduction objectives and environmental considerations into the design of programs, strengthening of the administrative and institutional capacity of countries undertaking the implementation of programs, and adequate and timely financing in a supportive external environment. The Committee agreed to continue its discussion of structural adjustment at its September 1988 meeting focusing on the resource requirements of such programs and the external environment in which these programs are implemented.

4. The Industrial Policies of the Developed Countries

Concern about the impact of industrial policies of the developed countries on the developing countries led to a discussion on the subject at the September 1988 meeting. The Committee noted that outward-looking industrial policies of developed countries were integral to progress on global adjustment and efforts to resolve the debt problem and were, therefore, of crucial importance to adjustment, growth, and development of developing countries. Protectionist and other trade-distorting measures were noted as having an adverse impact on the export earnings and national income of developing countries which can be quite substantial in relation to the level of official development assistance. Accordingly, the Committee emphasized the particular responsibility of industrial countries to promote a more open multilateral trading system. The Committee encouraged the Bank to include in the analyses it prepared in support of development and growth-oriented programs, assessments of the impact on developing countries’ export prospects of their trading partners’ trade policies. The Fund was also called on, in the context of Fund surveillance and the design of Fund-supported adjustment programs, to give greater priority to industrial and trade liberalization policies in cooperation with the relevant international organizations. The Committee also stressed that actions to liberalize trade were required by developing countries in order to maximize their gains from trade. The Committee, accordingly, urged a successful outcome at the midterm review of the Uruguay Round calling for active participation by all countries in these negotiations.

5. Poverty

From its April 1987 meeting the Committee had expressed concern at increasing poverty trends and deteriorating social conditions in many developing countries and agreed to have a discussion on the subject at a future meeting of the Committee. An in-depth discussion on poverty issues, including the impact of structural and adjustment policies of poverty alleviation took place at the Committee’s September 1988 meeting. The Committee then concluded that these problems could only be dealt with through the achievement of sustained growth by the developing countries. It was agreed that the reduction of poverty was a crucial objective of development and that intensified efforts were necessary, in which governments of the developing countries had the prime responsibility for adopting anti-poverty policies. These efforts should be strongly supported by the international community by additional and well-targeted concessional resources. A favorable external environment was also important to stimulate growth and strengthen poverty programs particularly in low-income countries. The Committee welcomed the renewed emphasis by the World Bank to poverty reduction in its policies and operations and agreed that there should be periodic review of progress made in addressing poverty issues. The Bank was encouraged to explore further possibilities of financing poverty-reduction programs, particularly in low-income countries. The Committee also called for special attention to protecting the vulnerable groups during periods of adjustment and requested the Bank and the Fund to design adjustment programs and adopt well-targeted compensatory measures to protect the poorest segment of the population from the adverse effects of adjustment. Beyond this concern, the Committee emphasized the need to incorporate income-generating activities and investments in human resources in structural adjustment programs so as to strengthen the impact of growth on poverty reduction.

6. Environment and Development

The Committee first began discussions on environmental issues in April 1987. At that time the Bank’s current initiatives at increasing emphasis on environmental protection were welcomed. A further report from the Bank drawing on the report of the World Commission on Environment and Development (Brundtland) was encouraged. In light of the concern expressed in the spring of 1988 about the close linkage between environmental degradation and poverty, the Bank was also encouraged to provide suggestions at a future meeting on how best to address these problems. Successive meetings of the Committee consistently reviewed the role of the Bank in respect of the environmental aspects of its work. In September 1988, after a review of a World Bank report on its environmental programs, the Committee welcomed the concrete steps taken by the Bank in integrating environmental considerations in its lending operations. The Committee, however, underlined the need for steps to be taken to strengthen public confidence in the Bank’s commitment to support sound environmental practices and the Bank’s Executive Board was requested to review and publish an annual report on the environmental aspects of its operations, including an assessment of selected projects having major environmental impact. This request was followed by a call at the April 1989 meeting of the Committee for a discussion at its next meeting (September 1989) of the Bank’s efforts to support the environment, including the integration of environmental concerns in Bank operations and measures to increase public awareness of Bank environmental activities.

7. Transfer of Resources

The Committee maintained a review of trends in the transfer of resources which is now a standing item on its agendas. While welcoming certain positive developments in the transfer of resources to developing countries, the Committee noted the decline in overall flows to these countries and the negative transfers to some of them, and reiterated the need for larger flows of all types for economic growth, poverty reduction, structural adjustment, resolution of debt difficulties, and environmental conservation. Members reiterated the importance of a favorable climate for foreign private investment which could play a much greater role in the transfer of resources. The World Bank, IFC, and MIGA were called on to strengthen efforts in stimulating such flows and assisting in the creation of a favorable environment to private investment. Reviewing the trends in the flow of ODA, the Committee encouraged efforts, especially by donors whose assistance levels are below the 0.7 percent ODA/GNP target, to reverse the current declining trend in overall financial flows and the negative transfers of several developing countries. The need for an increased flow of concessional resources to promote growth, poverty reduction, and adjustment objectives was particularly emphasized. In this connection, the Committee stressed the importance of reaching agreement on the Ninth Replenishment of IDA, with effect from July 1990, at a level commensurate with the needs of IDA-eligible countries.

Annexes

  • A. Members of the Committee

  • B. Agendas and Press Communiqués of Meetings Held in September 1988 and April 1989

Annex A: Members of the Committee

MemberCountries
1.Mohammad Abalkhail Minister of Finance and National EconomySaudi Arabia
Saudi Arabia
2.Ibrahim Abdul KarimBahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Socialist People’s Libyan Arab Jamahiriya, Maldives, Oman, Pakistan, Qatar, Somalia, Syrian Arab Republic, United Arab Emirates, Yemen Arab Republic, People’s Democratic Republic of Yemen
Minister of Finance and National Economy
Bahrain
3.Giuliano Amato Minister of the Treasury ItalyGreece, Italy, Malta, Poland, Portugal
4.Pierre BérégovoyFrance
Minister of State for Economy, Finance, and the Budget
France
5.Gunnar Berge Minister of Finance NorwayDenmark, Finland, Iceland, Norway, Sweden
6.Mohamed Berrada Minister of Finance MoroccoAfghanistan, Algeria, Ghana, Islamic Republic of Iran, Morocco, Tunisia
7.Nicholas F. Brady Secretary of the Treasury United StatesUnited States
8.S.B. Chavan Minister of Finance IndiaBangladesh, Bhutan, India, Sri Lanka
9.B.T.G. Chidzero1 Senior Minister of Finance, Economic Planning and Development ZimbabweBotswana, Burundi, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe
10.Daim ZainuddinFiji, Indonesia, Lao People’s
Minister of Finance MalaysiaDemocratic Republic, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga, Viet Nam
11.Jorge Gallardo ZavalaBrazil, Colombia, Dominican
Minister of Finance and Public Credit EcuadorRepublic, Ecuador, Guyana, Haiti, Panama, Suriname, Trinidad and Tobago
12.Paul J. KeatingAustralia, Kiribati, Korea, New
TreasurerZealand, Papua New Guinea,
AustraliaPhilippines, Seychelles, Solomon Islands, Vanuatu, Western Samoa
13.Hans Klein2Federal Republic of Germany
Federal Minister for Economic Cooperation
Federal Republic of Germany
14.Abdoulaye Koné Minister of Economy and FinanceBenin, Burkina Faso, Cameroon, Cape Verde, Central African
Côte d’I voireRepublic, Chad, Comoros, People’s Republic of the Congo, Côte d’lvoire, Djibouti, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Sao Tome and Principe, Senegal, Togo, Zaire
15.Nigel LawsonUnited Kingdom
Chancellor of the Exchequer
United Kingdom
16.Philippe Maystadt Minister of Finance BelgiumAustria, Belgium, Hungary, Luxembourg, Turkey
17.Tatsuo Murayama Minister of Finance JapanJapan
18.Carlos Rivas Davila3 Minister of Economy and Finance PeruArgentina, Bolivia, Chile, Paraguay, Peru, Uruguay
19.H.O. Ruding Minister of Finance NetherlandsCyprus, Israel, Netherlands, Romania, Yugoslavia
20.Carlos Solchaga Minister of Economy and Finance SpainCosta Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, Venezuela
21.Wang Bingqian State Councillor and Minister of Finance ChinaChina
22.Michael H. Wilson Minister of Finance CanadaAntigua and Barbuda, The Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Ireland, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent

Saihou S. Sabally, Minister of Finance and Trade, The Gambia, served as Alternate Member to permit B.T.G. Chidzero to serve as Chairman.

Jürgen Warnke became Minister for Economic Cooperation of the Federal Republic of Germany in May 1989.

In June 1989 Bolivia succeeded Peru as member to the Development Committee with Fernando Romero, Minister of Planning and Coordination, Bolivia.

Saihou S. Sabally, Minister of Finance and Trade, The Gambia, served as Alternate Member to permit B.T.G. Chidzero to serve as Chairman.

Jürgen Warnke became Minister for Economic Cooperation of the Federal Republic of Germany in May 1989.

In June 1989 Bolivia succeeded Peru as member to the Development Committee with Fernando Romero, Minister of Planning and Coordination, Bolivia.

Annex B: Agendas and Press Communiqués of Meetings Held in September 1988 and April 1989

Meeting of September 26, 1988

  • Agenda

    • Poverty Issues, Including the Impact of Structural and Adjustment Policies on Poverty Alleviation

    • Impact of Industrial Policies of the Developed Countries on the Developing Countries

    • Review of Developments in Respect of the Low- and Middle-Income Heavily Indebted Countries

    • Progress Reports:

      • (a) trends in the transfer of resources

      • (b) the World Bank’s environmental program

      • (c) current international trade issues

    • Annual Report of the Committee

    • Other Business

  • Press Communiqué (text published in Summary Proceedings, 1988, pages 253–57)

Meeting of September 29, 1988

  • Agenda

    • Adoption of Provisional Agenda

    • Selection of Chairman

    • Press Announcement

    • Other Business

  • Press Announcement (text published in Summary Proceedings, 1988, page 258)

Meeting of April 4, 1989

  • Agenda

    • Problems and Issues in Structural Adjustment

    • Development Prospects for the Severely Indebted Countries

    • Promoting Economic Recovery and Development in Sub-Saharan Africa—Review of Progress on Various Initiatives Intended to Benefit Sub-Saharan Africa

    • Reports:

      • (a) current international trade developments with particular reference to the Uruguay Round

      • (b) trends in the transfer of real resources

      • (c) status of negotiations for the Ninth Replenishment of IDA

    • Other Business

  • Press Communiqué

    • The Development Committee met in Washington on April 4, 1989, under the chairmanship of the Hon. B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe.1

    • The Committee discussed three closely interrelated issues: (a) problems and issues in structural adjustment; (b) development prospects in the severely indebted countries; and (c) progress on initiatives intended to benefit sub-Saharan countries. It also considered reports on recent developments in international trade, trends in the transfer of resources to developing countries, and the status of negotiations for the Ninth Replenishment of IDA.

    • The Committee initiated its first global review of experience with growth-oriented structural adjustment programs assisted by the Bank and the Fund and focused at this meeting mainly on design and implementation of programs. Members agreed that, while results varied, structural adjustment programs adopted by developing countries generally have helped to make their economies more efficient and to lay the foundation for the resumption of growth, which would lead to an improvement in living standards. They underlined the central roles which the Bank and the Fund had to play in contributing to the adjustment process by policy advice and financial support for sound reform programs.

    • The Committee concluded that the essential ingredients for successful structural adjustment programs were:

      • (a) government-owned programs and sustained political commitment to sound macroeconomic policies;

      • (b) well-designed programs with broad public understanding, drawn up with a realistic time frame taking into account the deep-seated structural problems and the country’s social, demographic, and political environment;

      • (c) the integration of poverty reduction objectives and environmental considerations into the design of programs as well as ways of mitigating the adverse effects on the most vulnerable groups preferably by income-generating programs;

      • (d) administrative and institutional capacity adequate for their implementation which could be strengthened where necessary with the assistance of the Bank, the Fund, and donors; and

      • (e) adequate and timely financing, a supportive external environment, including open markets and structural adjustment in the industrial countries.

    • The Committee welcomed the benefits derived by a number of countries from the introduction of structural adjustment programs. Accordingly, they called on all governments to reaffirm their commitment to growth-oriented adjustment which could build confidence in the investment community at home and abroad.

    • Given the central roles of the Bank and the Fund in assisting the design and the financing of structural adjustment programs, members welcomed the efforts by the institutions to develop further their collaboration, while avoiding cross conditionality, and to make full use of their comparative advantage in respect of the advice they offer borrowing countries on the design, financing, and monitoring of programs.

    • The Committee reviewed the development prospects of the severely indebted countries. In spite of the improvement in trade earnings, prospects were adversely affected by the low level of investment and rising interest rates. The Committee welcomed the fact that new proposals had been made by France, Japan, and, more recently, the United States to review and strengthen the current strategy through stronger emphasis on a broader-based approach to voluntary debt and debt-service reduction, new investment, adjustment measures, the repatriation of flight capital, together with new lending by commercial banks. Efforts in these areas could help to ease debt-service burdens, reduce negative transfers, and produce more manageable new financing needs. Members agreed that the strengthening of the debt strategy required a cooperative effort by debtor and creditor governments, commercial banks, and international institutions. The Committee stressed that official creditors should not substitute for private lenders. Members also felt that the development needs of low- and lower middle-income countries whose debts are mainly to official creditors had to be given special attention. They agreed to discuss the evolving debt strategy and its impact on development prospects at their next meeting with the assistance of appropriate analyses covering all indebted countries.

    • Members recognized that an increased level of investment in debtor countries was critical to improving growth and development prospects. Priority should be given to the adoption of economic policies that will restore investor confidence, encourage domestic savings and the repatriation of flight capital, stimulate foreign investment in these countries, and expedite their return to international capital markets. Members called on debtor countries to consider the potential benefits of debt-equity conversion programs and to implement or strengthen such programs, consistent with the need to maintain appropriate macroeconomic frameworks.

    • Members agreed that active support by the commercial banks remained critical. The Committee called on commercial banks to provide more diversified financial support, including new lending and debt/debt-service reduction, to debtor countries implementing sound economic reform programs. Members felt that the prospect of an improvement in the quality of commercial banks’ claims should encourage them to move expeditiously in removing legal impediments to debt and debt-service reduction in loan agreements. The Committee encouraged debtor countries and commercial banks to work closely together to achieve this objective.

    • Members agreed that, as part of the critical assistance the World Bank and the International Monetary Fund can offer for adjustment programs, the two institutions should provide support for voluntary, market-based debt reduction transactions. The Committee agreed that the Bank and the Fund should set aside a portion of members’ policy-based financing to support debt reduction operations. In addition, the Bank and the Fund should examine the possibility of limited interest support for transactions involving significant debt or debt-service reduction. The Committee stressed that this should be done in a way that would preserve the financial integrity of the institutions and should not adversely affect the availability of resources for their traditional operations. The qualification criteria for the support of such debt alleviation operations should be carefully examined. Members requested the Bank and Fund to move expeditiously to develop and implement specific proposals to achieve this objective. Members recognized that these efforts by the institutions needed to be supplemented by other financial sources and warmly welcomed the intention of Japan to extend additional finance in parallel to Fund arrangements.

    • Governments of creditor countries were encouraged to continue to provide financial support through Paris Club reschedulings and export credit cover policies. They were also encouraged to examine their tax, accounting, and regulatory measures with a view to reducing unnecessary impediments to voluntary debt and debt-service reductions. Members encouraged financial support to strengthen the debt strategy from countries in a position to do so.

    • Members welcomed the recent further development of cooperative efforts in helping countries with overdue obligations to the Bank and the Fund to become current with multilateral financial institutions and to regain access to international financial resources. They encouraged the two institutions and bilateral donors to continue to cooperate closely in pursuing these objectives.

    • The Committee reviewed the progress on initiatives intended to benefit sub-Saharan African countries. It took note of recent positive economic developments, particularly in countries which have adopted adjustment programs with the joint support of the Bank and donors in the framework of the Special Program of Assistance (SPA) and of the Fund through its structural adjustment facilities. It encouraged these countries to persevere in the adjustment effort. Members welcomed the implementation by the Paris Club of the recent agreement to provide concessional debt rescheduling including debt and interest rate reduction to low-income debt-distressed countries undertaking adjustment programs. In view of the financial needs of sub-Saharan Africa, the Committee urged bilateral donors and multilateral agencies to speed up commitments and disbursements in the SPA and further harmonize their procedures.

    • Members agreed that the international community should work toward facilitating external financial support to African governments’ adjustment efforts in the period beyond 1990. This should include continuation of the collaborative framework for donor action developed under the SPA and coordinated by the Bank, as well as the examination of possible additional measures to address the economic and debt problems of these countries. Members also underlined the need to supplement quick-disbursing assistance to support adjustment in sub-Saharan Africa with adequate investment financing and technical assistance to help deal with the longer-term problems of the region.

    • The Committee received an account from the Director General of GATT on recent international trade developments and on the multilateral trade negotiations in the framework of the Uruguay Round. Members welcomed the overall growth in the volume of world trade and the improvement in the prices of some commodities exported by developing countries while the price of certain other commodities remained depressed. The Committee, however, reiterated its concern about the harm that protectionism continues to impose on the world economy and particularly on the developing countries. The Committee called for a speedy resolution of the outstanding issues to allow a successful conclusion of the midterm review of the Uruguay Round. Commitment by both developed and developing countries to the liberalization objectives of the Uruguay Round is necessary for the success of these multilateral trade negotiations.

    • The Committee reviewed recent trends in resource transfers to developing countries. Members called for efforts, especially by donors whose assistance levels are below the 0.7 percent target, to reverse the current declining trend in financial flows to the developing countries, and the negative transfers of several developing countries. They stressed the urgency of the need for poverty reduction on which the Committee had called for priority attention, particularly in the heavily populated Asian region and in Africa. Members reiterated the importance of a favorable climate for foreign private investment and called on the World Bank, IFC, and MIGA to strengthen their efforts to stimulate such flows.

    • Members emphasized the need in the case of the low-income countries for increased concessional resources to promote growth, poverty reduction, and adjustment objectives. Given the central role of IDA in this respect, members welcomed the start of negotiations for the Ninth Replenishment of IDA. The Committee underscored the importance of reaching agreement on IDA’s Ninth Replenishment, at a level commensurate with the pressing needs of IDA-eligible countries, possibly by the next meeting of the Committee so that it could have effect from July 1990.

    • The Committee agreed to continue its review of experience with growth-oriented structural adjustment programs at its next meeting, at which time the focus will be mainly on the resource requirements of such programs and the external environment in which programs are implemented. Documentation will be prepared by the Bank and the Fund. Having in mind the important contribution that private savings and investment can play in such programs, members also agreed to discuss in spring 1990 the support the Bank and the Fund can provide in enhancing the role of the private sector in development. They also agreed to consider the economic role of women in development at a future meeting.

    • Members stressed the increasing importance attached to environmental issues and to the timely dissemination of environmental information on Bank-supported operations. They welcomed the fact that the World Bank would provide a comprehensive report annually on the environmental aspects of its operations as requested at the September 1988 meeting of the Committee. They agreed to discuss at their next meeting the Bank’s efforts to support the environment including the integration of environmental concerns in Bank operations and measures to increase public awareness of Bank environmental activities.

    • The Committee agreed to meet again in Washington, D.C., on September 25, 1989.

Report I dealt with the business of the Boards of Governors of the World Bank Group. Report II and the Resolution contained within were adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the World Bank Group, on September 28, 1989.

See pages 21–24.

Resolution No. 44-4; see pages 236-37.

Report III and the recommendations contained within were adopted by the Boards of Governors of the World Bank Group and the Fund, in Joint Session, on September 28, 1989.

Mr. Barber B. Conable, President of the World Bank, Mr. Michel Camdessus, Managing Director of the International Monetary Fund, Mr. Yves L. Fortin, Executive Secretary of the Development Committee, and Mr. Lemboumba-Lepandou, Chairman of the Group of Twenty-Four, participated in the meeting. Observers from Switzerland and a number of international and regional organizations also attended.

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