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Reports of the Joint Procedures Committee

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1988
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Chairman……Sweden
Vice-Chairmen……Italy

Pakistan
Reporting Member……Austria

Other Members: Burkina Faso, Brazil, Central African Republic, China, Fiji, France, Federal Republic of Germany, Honduras, Japan, Mozambique, Oman, Philippines, St. Lucia, Saudi Arabia, Seychelles, United Kingdom, United States, Uruguay

Report I1

September 29, 1988

Mr. Chairman:

At the meeting of the Joint Procedures Committee held on September 28, 1988, 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. 1988 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. 1988 Regular Election of Executive Directors

    The Committee noted that the 1988 Regular Election of Executive Directors of the Fund [Annex I] had taken place and that the next Regular Election of Executive Directors will take place at the Annual Meeting of the Board of Governors in 1990.

  • 4. Financial Statements, Report on Audit, and Administrative Budget

    The Committee considered the Report on Audit for the financial year ended April 30, 1988, the Financial Statements contained therein (Fund Document No. 7 and Appendix VIII of the 1988 Annual Report), and the Administrative Budget for the financial year ending April 30, 1989, and the Capital Budget for capital projects beginning in financial year 1989 (Fund Document No. 9 and Appendix VII of the 1988 Annual Report).

    The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 8.3

  • 5. Amendments of Rules and Regulations

    The Committee has reviewed and noted the letter of the Managing Director and Chairman of the Executive Board to the Chairman of the Board of Governors, dated September 27, 1988, reproduced as Fund Document No. 10, regarding amendments of the Rules and Regulations set forth in Annex I to that document.

    The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Annex II of Fund Document No. 10.4

Approved:

/s/ Bengt Dennis/s/ Hellmuth Klauhs
Sweden—ChairmanAustria—Reporting Member

Annex I to Report I: Regulations for the Conduct of the 1988 Regular Election of Executive Directors

  • 1. Definitions: In these Regulations, unless the context shall otherwise require:

    • (a) “Articles” means the Articles of Agreement of the Fund.

    • (b) “Board” means the Board of Governors of the Fund.

    • (c) “Chairman” means the Chairman or Vice-Chairman acting as Chairman of the Board.

    • (d) “Governor” includes the Alternate Governor or any temporary Alternate Governor when acting for the Governor.

    • (e) “Secretary” means the Secretary or any acting Secretary of the Fund.

    • (f) “Election” means the 1988 Regular Election of Executive Directors.

    • (g) “Eligible votes” means the total number of votes that can be cast in the election.

  • 2. Date of Election: The election shall be held during a plenary session of the Annual Meeting to be held Wednesday, September 28, 1988.

  • 3. Eligibility: The Governors eligible to vote in the election shall be all of the Governors except those of the members that:

    • (a) are entitled to appoint an Executive Director pursuant to Article XII, Section 3(b)(i);

    • (b) have notified the Managing Director, in accordance with the procedure established by the Executive Board, of their intention to appoint an Executive Director pursuant to Article XII, Section 3(c).

  • 4. Schedule E: Subject to the supplementary regulations set forth herein, the provisions of Schedule E of the Articles shall apply to the conduct of the election.

  • 5. Number of Executive Directors to be Elected: Sixteen Executive Directors shall be elected. “Sixteen persons” shall be substituted for “fifteen persons” in paragraphs 2,3, and 6, and “fifteen persons” shall be substituted for “fourteen persons,” and “sixteenth” shall be substituted for “fifteenth” in paragraph 6, of Schedule E.

  • 6. Proportion of Votes Required to Elect: In paragraphs 2 and 5 of Schedule E “four percent” and in paragraphs 3, 4, and 5 “nine percent” shall not be changed.

  • 7. Nominations:

    • (a) Any person nominated by one or more Governors eligible to vote in the election shall be eligible for election as an Executive Director.

    • (b) Each nomination shall be made on a Nomination Form furnished by the Secretary, signed by the Governor or Governors making the nomination and deposited with the Secretary.

    • (c) A Governor may nominate only one person.

    • (d) Nominations may be made until 12 o’clock noon on the day before the day on which the election is scheduled to be held. The Secretary shall post and distribute a list of the candidates.

  • 8. Supervision of the Election: The Chairman shall appoint such tellers and other assistants and take such other action as he deems necessary for the conduct of the election.

  • 9. Ballots and Balloting:

    • (a) One ballot form shall be furnished, before a ballot is taken, to each Governor eligible to vote. On any particular ballot only ballot forms distributed for that ballot shall be counted.

    • (b) Each ballot shall be conducted by the deposit of ballot forms, signed by Governors eligible to vote, in a ballot box.

    • (c) When a ballot has been completed, the Chairman shall cause the ballots to be counted and the names of the persons elected to be announced promptly after the tellers have completed their tally of the ballot forms. If a succeeding ballot is necessary, the Chairman shall announce the names of the candidates to be voted on and the members whose Governors are entitled to vote.

    • (d) If the tellers shall be of the opinion that any particular ballot is not properly executed, they shall, if possible, afford the Governor concerned an opportunity to correct it before tallying the results, and such ballot form, if so corrected, shall be deemed valid.

    • (e) If a Governor does not vote for any candidate when entitled to do so, he shall not be entitled to vote on any subsequent ballot and his votes shall not be counted under Article XII, Section 3(/)(iii) toward the election of any Executive Director.

    • (f) If, at the time of any ballot, a member does not have a duly appointed Governor, such member or its Governor shall be taken not to have voted on that ballot.

    • (g) If a second or subsequent ballot would be required under Schedule E, but the number of remaining candidates is equal to the number of vacancies to be filled, those candidates shall be deemed to have been elected on the preceding ballot for the purposes of paragraph 14 of these Regulations.

  • 10. If on any ballot there are more candidates than the number of Executive Directors to be elected and two or more candidates tie with the lowest number of votes, no candidate shall be ineligible for election in the next succeeding ballot, but if the same situation is repeated on such succeeding ballot, the Chairman shall eliminate by lot one of the candidates from the following ballot.

  • 11. If any two or more Governors having an equal number of votes shall have voted for the same candidate and the votes of one or more, but not all, of such Governors could be deemed under paragraph 4 of Schedule E to have raised the total votes received by the candidate above nine percent of the eligible votes, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot.

  • 12. When on any ballot the number of candidates is the same as the number of Executive Directors to be elected, and no candidate is deemed to have received more than nine percent of the eligible votes, each candidate shall be considered elected by the number of votes received even though a candidate may have received less than four percent of the eligible votes.

  • 13. If the votes cast by a Governor raise the total votes received by a candidate from below to above nine percent of the eligible votes, the votes cast by the Governor shall be deemed under paragraph 4 of Schedule E not to have raised the total votes of the candidate above nine percent.

  • 14. Any member whose Governor has voted on the last ballot for a candidate not elected may, before the effective date of the election, as set forth in section 16 below, designate an Executive Director who was elected, and that member’s votes shall be deemed to have counted toward the election of the Executive Director so designated.

  • 15. Announcement and Review of Result:

    • (a) After the last ballot, the Chairman shall cause to be distributed a statement setting forth the result of the election.

    • (b) The Board of Governors, at the request of any Governor, will review the result of the election in order to determine whether, in light of the objectives set forth in Chapter O, Section 2 of the Report by the Executive Directors to the Board of Governors on the Proposed Second Amendment to the Articles of Agreement, an additional Executive Director should be elected to serve for the term of office commencing November 1, 1988.

  • 16. Effective Date of Election of Executive Directors: The effective date of election shall be November 1, 1988, and the term of office of the elected Executive Directors, and of any Executive Director appointed under Article XII, Section 3(c), shall commence on that date. Incumbent elected Executive Directors shall serve through October 31, 1988.

  • 17. General: Any question arising in connection with the conduct of the election shall be resolved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Board. Whenever possible, any such question shall be put without identifying the members or Governors concerned.

As approved by Board of Governors Resolution No. 43-4, September 6, 1988

Statement of Results of Elections, September 28, 1988

Candidate ElectedMembers Whose Votes

Counted Toward Election5
Number of Votes
Dai QiandingChina24,159
Jacques de GroóteAustria8,006
Belgium21,054
Hungary5,557
Luxembourg1,020
Turkey4,541
40,178
El Tayeb El KogaliBotswana471
Burundi677
Ethiopia956
The Gambia421
Kenya1,670
Lesotho401
Liberia963
Malawi622
Mozambique860
Nigeria8,745
Sierra Leone829
Sudan1,947
Swaziland497
Tanzania1,320
Uganda1,246
Zambia2,953
Zimbabwe2,160
26,738
Ernesto FeldmanArgentina11,380
Bolivia1,157
Chile4,655
Paraguay734
Peru3,559
Uruguay1,888
23,373
Leonor FilardoCosta Rica1,091
El Salvador1,140
Guatemala1,330
Honduras928
Mexico11,905
Nicaragua932
Spain13,110
Venezuela13,965
44,401
Mohamed FinaishBahrain739
Egypt4,884
Iraq5,290
Jordan989
Kuwait6,603
Lebanon1,037
Libya5,407
Maldives270
Oman881
Pakistan5,713
Qatar1,399
Somalia692
Syrian Arab Republic1,641
United Arab Emirates2,276
Yemen Arab Republic683
Yemen, People’s Democratic
Republic of1,022
39,526
Mohammad Reza GhasimiAfghanistan1,117
Algeria6,481
Ghana2,295
Iran, Islamic Republic of6,850
Morocco3,316
Tunisia1,632
21,691
J. E. IsmaelBurma1,620
Fiji615
Indonesia10,347
Lao People’s Democratic Republic543
Malaysia5,756
Nepal623
Singapore1,174
Thailand4,116
Tonga282
Viet Nam2,018
27,094
Bimal JalanBangladesh3,125
Bhutan275
India22,327
Sri Lanka2,481
28,208
Alexandre KafkaBrazil14,863
Columbia4,192
Dominican Republic1,371
Ecuador1,757
Guyana742
Haiti691
Panama1,272
Suriname743
Trinidad and Tobago1,951
27,582
Marcel MasséAntigua and Barbuda300
The Bahamas914
Barbados591
Belize345
Canada29,660
Dominica290
Grenada310
Ireland3,684
Jamaica1,705
St. Kitts and Nevis295
St. Lucia325
St. Vincent290
38,709
Mawakani SambaBenin563
Burkina Faso566
Cameroon1,177
Cape Verde295
Central Africa Republic554
Chad556
Comoros295
Congo623
Côte d’Ivoire1,905
Djibouti330
Equatorial Guinea434
Gabon981
Guinea829
Guinea-Bissau325
Madagascar914
Mali758
Mauritania589
Mauritius786
Niger587
Rwanda688
Sao Tome and Principe290
Senegal1,101
Togo634
Zaire3,160
18,940
Jorgen OviDenmark7,360
Finland5,999
Iceland846
Norway7,240
Sweden10,893
32,338
G. A. PosthumusCyprus947
Israel4,716
Netherlands22,898
Romania5,484
Yugoslavia6,380
40,425
C. R. RyeAustralia16,442
Kiribati275
Korea4,878
New Zealand4,866
Papua New Guinea909
Philippines4,654
Seychelles280
Solomon Islands300
Vanuatu340
Western Samoa310
33,254
Salvatore ZecchiniGreece4,249
Italy29,341
Malta701
Poland7,050
Portugal4,016
45,357
/s/ Augusto Zodda/s/ Imtiaz Alam Hanfi
(Italy)(Pakistan)
TellerTeller

Annex II to Report I

September 27, 1988

Dear Mr. Chairman:

In accordance with Section 16 of the By-Laws, the attached amendments of the Rules and Regulations adopted since the 1987 regular meeting are submitted for review by the Board of Governors.

In response to members’ desires and evolving market conditions, and to further enhance the SDR’s competitiveness and attractiveness in comparison with other reserve assets, the Executive Board decided on June 1, 1988 to modify Rule P-6 governing settlement dates for transactions by agreement. Rule P-6(a) had formerly allowed parties to transactions by agreement to settle transactions on the second or third business day after initiating a transaction. It was recognized, however, that improved communications and processing technology had made it possible for foreign exchange market transactions and transactions in other reserve assets to be settled the next business day, or even the same day if desired. Participants had, on occasion, requested settlement of SDR transactions in less than the two or three business days originally permitted. The modification to paragraph (a) of Rule P-6 allows for the settlement of transactions by agreement on the day of the agreement or on any business day within three subsequent business days, as agreed by the participants, thus bringing the SDR’s characteristics more into line with those of other reserve assets.

On June 23, 1988 the Executive Board agreed to effect several changes to Rule E-l in order to bring its provisions closer to the text of the corresponding provision of the Fund’s Articles of Agreement, and to remove a redundant provision concerning currency subscriptions. Rule E-l concerns the issuance to the Fund by members of notes in substitution for Fund holdings of their respective currencies in the General Resources Account. While Article III, Section 4 of the Articles of Agreement provides for the substitution for members’ currencies of notes and other similar obligations, Rule E-l did not specifically deal with the acceptance by the Fund of obligations other than notes. In recent years securities have been developed that no longer consist of a physical instrument but that are in uncertificated form. The amendment to Rule E-l allows the Fund to accept such obligations. In addition, the first sentence of Rule E-l, which dealt with the requirement of making currency subscription payments at the appropriate depository, was deleted as this requirement is already covered by Article III, Sections 1 and 3, and by the terms and conditions of Fund membership specified in the membership resolutions of the Board of Governors. As a result of these amendments, the E-Rules no longer contain any provisions governing subscriptions, but address only the substitution of securities for currency. Accordingly, the heading of the E-Rules was changed from “Subscriptions” to “Substitution of Securities for Currency.”

Following the Executive Board’s deliberations on the provisions for the new Compensatory and Contingency Financing Facility, Rule I-6(4), which deals with the determination of the rate of charge on holdings as a result of purchases in the credit tranches and under certain facilities, was amended on August 23, 1988 to incorporate purchases under the Compensatory and Contingency Financing Facility.

The Executive Board has made no other changes in the Rules and Regulation’s since the last Annual Meeting.

Very truly yours,

/s/

M. Camdessus

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1988 Annual Meeting

International Monetary Fund

Attachment. Rules and Regulations Amended Since the 1987 Annual Meeting

  • 1. Rule E-1. Text as amended June 23, 1988.

    Each member is authorized to substitute, in accordance with Article III, Section 4, non-negotiable, non-interest bearing notes or similar obligations payable to the Fund on demand for that part of the currency holdings of the Fund in the General Resources Account which exceed 1/4 of 1 percent of the member’s quota, and the depository shall hold such notes or similar obligations for the account of the Fund. Such notes or similar obligations shall not be accepted until the Fund is satisfied that they are in proper form and that their issue has been authorized. The balances held in the administrative accounts of the Fund shall not be considered as part of the currency holdings of the Fund for the application of this Rule.

  • 2. Rule I-6(4). Text as amended August 23, 1988.

    The rate of charge on holdings acquired as a result of a purchase (i) in the credit tranches, or (ii) under the Extended Fund Facility (Executive Board Decision No. 4377-(74/l 14), as amended), or (iii) under the Facility for the Compensatory Financing of Export Fluctuations (Executive Board Decision No. 4912-(75/207), as amended), or (iv) under the Facility for the Problem of Stabilization of Prices of Primary Products (Executive Board Decision No. 2772-(69/47), as amended), or (v) under the Facility for Compensatory Financing of Fluctuations in the Cost of Cereal Imports (Executive Board Decision No. 6860-(81/81), as amended), or (vi) under the Compensatory and Contingency Financing Facility (Executive Board Decision No. 8955-(88/126)), shall be determined in accordance with (a), (b), and (c) below.

    • (a) The rate of charge shall be determined at the beginning of each financial year on the basis of the estimated income and expense of the Fund during the year and the target amount of net income for the year. The latter shall be 5 percent of the Fund’s reserves at the beginning of the year or such other percentage as the Executive Board may determine particularly in the light of the results in the previous financial year.

    • (b) A mid-year review of the Fund’s income position shall be held shortly after October 31 of each year. If actual net income for the first six months of the financial year, on an annual basis, is below the target amount for the year by an amount equal to, or greater than, 2 percent of the Fund’s reserves at the beginning of the financial year, the Executive Board will consider how to deal with the situation. If on December 15 no agreement has been reached as a result of this consideration, the rate determined under (a) at the beginning of the year shall be increased as of November 1 to the level necessary to reach the target amount of net income for the year.

    • (c) A review of the Fund’s income position shall be held shortly after the end of each financial year. If the net income for the year just ended is in excess of the target amount for the year, the Executive Board will consider whether the whole or a part of the excess should be used to reduce the rate of charge, or increase the rate of remuneration to not more than the rate of interest of the SDR, retroactively for the year just ended, or both, or to place all or part of the excess to reserve.

    • (d) If the Fund’s net income for a financial year is in excess of the target amount for that year, the Executive Board may for the purposes of the determinations and estimates referred to in (a) and (b) above in respect of the immediately subsequent financial year, decide to deem any part of the excess over the target amount that has been placed to reserve as income for that subsequent financial year.

  • 3. Rule P-6. Text as amended June 1, 1988.

    • (a) The exchange rate in a transaction by agreement between participants shall be determined under Rule 0-2 as of the date of the agreement, unless the transaction is carried out at another exchange rate pursuant to authorization by the Fund under Article XIX, Section 7(b). Settlement shall take place on the date of the agreement or any business day within three business days from that date, as agreed between the participants.

    • (b) No participant shall levy any charge or commission in respect of a transaction under Article XIX, Section 2(b).

Report III1

September 29, 1988

Mr. Chairman:

The Joint Procedures Committee met on September 28, 1988 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 Fund and the Bank pursuant to paragraph 5 of Resolutions Nos. 29-9 and 294 of the Fund and the Bank, respectively (Fund Document No. 5 and Bank Document No. 3).

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

2. Officers and Joint Procedures Committee for 1988/89

The Committee recommends that the Governor for Korea be Chairman, and the Governors for Germany and Madagascar be Vice Chairmen, of the Boards of Governors of the Fund and of the World Bank Group 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: Belize, Bhutan, Ecuador, Egypt, Finland, France, Germany, Japan, Korea, Madagascar, Maldives, Mali, Mexico, Nigeria, St. Vincent, Saudi Arabia, Spain, Tanzania, United Arab Emirates, United Kingdom, United States, and Yugoslavia.

It is recommended that the Chairman of the Joint Procedures Committee shall be the Governor for Korea, and the Vice Chairmen shall be the Governors for Germany and Madagascar, and that the Governor for Ecuador shall serve as Reporting Member.

Approved:

/s/ Bengt Dennis
/s/ Kjell-Olof Feldt/s/ Hellmuth Klauhs
Sweden—ChairmenAustria—Reporting Member

Annex to Report III

September 26, 1988

Sirs:

As Chairman of the Joint Ministerial Committee of the Boards of the 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 1987-June 1988. 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.

Sincerely yours,

/s/

B.T.G. Chidzero

Chairman

Development Committee

Attachment

The Honorable

Bengt Dennis

Chairman of the Board of Governors International Monetary Fund

The Honorable

Kjell-Olof Feldt

Chairman of the Board of Governors 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 1987-June 1988)

I. Introduction

The Committee held two meetings during the period under review under the chairmanship of B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe. Both meetings were convened in Washington, D.C., the first on September 28, 1987, and the second on April 15, 1988.

The meetings were conducted on the basis of a format with a morning plenary session for general statements and an informal afternoon session for a free dialogue between members on topics arising from the agenda. At both meetings a luncheon for members was held, providing an opportunity for private discussions on the work program of the Committee (September 1987) and on the debt problem (April 1988).

Background papers for the meetings were provided by the staffs of the World Bank and the IMF. In addition, papers were submitted in advance by the following official observers to the Committee:

  • African Development Bank

  • Asian Development Bank

  • Development Assistance Committee

  • General Agreement on Tariffs and Trade

  • Inter-American Development Bank

  • International Fund for Agricultural Development

  • Islamic Development Bank

  • OPEC Fund for International Development

  • United Nations

  • United Nations Conference on Trade and Development

II. Global Economic Environment

A range of international development issues, centered on revitalizing and sustaining growth in the developing countries, was discussed by the Committee against the background of difficult global economic environment facing these countries. The Committee noted a continued weakness of many commodity prices and increasing protectionist pressures. Industrial countries recorded modest levels of growth, and there was a persistence of large financial imbalances among major countries during the year under review. Growth in the developing countries as a group slowed in 1987 (4 percent) from the level in 1986 (4.5 percent), although a short-term rebound in growth was forecast for 1988. At the same time, there was great disparity in growth among developing countries as differences in economic performance became more marked. A few developing countries with high manufacturing export capacity achieved strong growth. However, there was a decline in growth in many primary producing and heavily indebted countries.

III. International Development Issues

The themes of the Committee’s discussions during the year were the following current development issues:

  • (1) Indebtedness of the low-income countries;

  • (2) Problems of the middle-income heavily indebted countries;

  • (3) Adequacy of the transfer of resources (including IDA-8 and the question of a General Capital Increase for the World Bank);

  • (4) Impact of industrial policies of developed countries on the developing countries;

  • (5) Environment and development; and

  • (6) International trade developments.

The conclusions reached by the Committee on these issues are set out fully in the communiqués of the meetings, attached to this report. A digest of the progress of the Committee’s work during the year on these subjects follows.

1. Indebtedness of the Low-Income Countries

In focusing attention on proposals for action for the low-income countries facing exceptional difficulties, especially the seriously indebted countries in sub-Saharan Africa, the Committee called on the Fund and the Bank to strengthen their joint efforts. The Committee was encouraged by positive developments with the full effectiveness of IDA-8 and initiatives taken by the Bank and the Fund for the successful launching of the World Bank’s Special Program of Assistance for the highly indebted low-income African countries and the establishment of the IMF’s enhanced structural adjustment facility. In reviewing the problem of indebtedness of the poorest countries, creditors and debtors were urged to take additional measures to ease the debt burden including, where possible, interest rate reduction in official reschedulings or alternative measures, which would have a similar impact.

2. Problems of the Middle-Income Heavily Indebted Countries

Following a discussion of the growth-oriented programs in the heavily indebted middle-income countries, the Committee concluded that there was a need to keep the debt strategy under review so as to enhance the prospects for growth and development. The Committee stressed the importance of effective adjustment efforts by the indebted countries and increased capital flows on terms adapted to their payments situation. In these efforts, the Committee was of the view that the Bank and the Fund had a leadership role to play not only in expanding financial flows and providing policy advice, but in facilitating developments in the “menu” approach on a case-by-case basis, thereby catalyzing financial support for a growth-oriented debt strategy.

At the April 1988 meeting, members also recognized that there were a number of lower middle-income countries having serious economic difficulties, including heavy indebtedness, which deserve attention by the international community.

3. Adequacy of the Transfer of Resources (Including the Question of the General Capital Increase for the World Bank)

In September 1987, the Committee called for the early effectiveness of IDA-8, which took place later in the year under review. The Committee reviewed the capital requirements of the World Bank in light of its sustainable level of lending and the constraints on loan disbursements from the “headroom” situation arising from exchange rate changes. In April 1988, the Committee welcomed the agreement reached by the Executive Board of the World Bank for a general capital increase of $74.8 billion and its early approval by many governors of the institution following the Committee’s earlier call for a substantial increase in the Bank’s capital base sufficient to support a growing lending program for an appropriately long period of time. The Committee also called on those countries that had not yet contributed to the Fund’s enhanced structural adjustment facility to do so.

The Committee also broadly addressed the question of the adequacy of resource transfers to the developing countries in all forms and reached the conclusion that an enlarged volume of financial flows to the developing countries was required to meet the need for economic growth, poverty alleviation and environmental conservation, structural adjustment, and the resolution of debt difficulties. In particular, it was considered that policies and actions by both developed and developing countries, as well as the strengthening of the international financial institutions, could enhance the flow of these resources.

4. Impact of Industrial Policies of Developed Countries on the Developing Countries

In April 1987, the Committee called for urgent attention to be given to the liberalization of industrial protection and for a discussion based on reports by the Bank and the Fund. A preliminary discussion of the subject of the impact of the industrial policies of the developed countries on the developing countries was held by the Committee in September 1987. It was agreed in April 1988 to have a further consideration of this subject at the September 1988 meeting on the basis of studies by the Bank and the Fund.

5. Environment and Development

After a review of a paper by the World Bank on its environmental program, taking into account elements of the Brundtland Commission report, Our Common Future, the Committee drew attention to the conceptual interrelationship of growth, development, and environmental conservation and the significance for operational objectives. Given the close link between environmental degradation and poverty, the Committee concluded that substantial resources were required to assist countries in dealing with these interrelated problems. The Committee requested a progress report on the implementation of the Bank’s environmental program for the September 1988 meeting.

6. International Trade Developments

The Committee was briefed by the Director General of GATT on current international trade issues, in particular on the status of the negotiations in the Uruguay Round. The importance of the Uruguay Round in furthering trade liberalization in a global strategy on debt and development was emphasized, and in particular, the removal of distortions to trade in both agricultural and industrial products. There was agreement that the reduction of protectionist measures would stimulate increased resource flows and, in this connection, progress in the negotiations in the Uruguay Round was urged.

IV. Appointment of Executive Secretary

At its September 1987 meeting, the Committee appointed Yves L. Fortin from Canada to succeed Fritz Fischer from the Federal Republic of Germany as Executive Secretary, with effect from November 16, 1987.

Annexes

  • A. Members of the Committee

  • B. Agendas and Press Communiqués of Meetings Held in September 1987, and April 1988

Annex A. Members of the Committee

MemberCountries
1.His ExcellencySaudi Arabia
Sheikh Mohammad Abalkhail
Minister of Finance and National
Economy
Saudi Arabia
2.His ExcellencyBahrain, Egypt (Arab Republic of),
Ibrahim Abdul KarimIraq, Jordan, Kuwait, Lebanon,
Minister of FinanceMaldives, Oman, Pakistan, Qatar,
and National EconomySyrian Arab Republic, United Arab
BahrainEmirates, Yemen Arab Republic
3.The HonorableGreece, Italy, Malta, Portugal
Giuliano Amato
Deputy Prime Minister and
Minister of the Treasury
Italy
4.The HonorableUnited States
James A. Baker III
Secretary of the Treasury
United States
5.His ExcellencyFrance
Pierre Bérégovoy
Minister of State for Economy,
Finance and the Budget
France
6.His ExcellencyAfghanistan (Democratic Republic
Mohamed Berradaof), Algeria, Ghana, Iran (Islamic
Minister of FinanceRepublic of), Socialist People’s
MoroccoLibyan Arab Jamahiriya, Morocco,
Tunisia, Yemen (People’s
Democratic Republic of)
7.His ExcellencyBrazil, Colombia, Dominican
Eduardo CabezasRepublic, Ecuador, Haiti,
Minister of Finance andPhilippines
Public Credit
Ecuador
8.The HonorableBotswana, Burundi, Ethiopia, The
B.T.G. Chidzero1Gambia, Guinea, Kenya, Lesotho,
Senior Minister of Finance,Liberia, Malawi, Mozambique,
Economic Planning and DevelopmentNigeria, Seychelles, Sierra Leone,
ZimbabweSudan, Swaziland, Tanzania,
Trinidad and Tobago, Uganda,
Zambia, Zimbabwe
9.The HonorableAustralia, Kiribati, Korea, New
Paul J. Keating, M.P.Zealand, Papua New Guinea,
TreasurerSolomon Islands, Vanuatu, Western
AustraliaSamoa
10.His ExcellencyFederal Republic of Germany
Hans Klein
Federal Minister for Economic
Cooperation
Germany
11.His ExcellencyBenin, Burkina Faso, Cameroon,
Abdoulaye KoneCape Verde, Central African
Minister of Economy and FinanceRepublic, Chad, Comoros, Congo,
Côte d’IvoireCôte d’Ivoire, Djibouti, Equatorial
Guinea, Gabon, Guinea-Bissau,
Madagascar, Mali, Mauritania,
Mauritius, Niger, Rwanda, Sao
Tome and Principe, Senegal,
Somalia, Togo, Zaire
12.The Right HonorableUnited Kingdom
Nigel Lawson, M.P.
Chancellor of the Exchequer
United Kingdom
13.His ExcellencyDenmark, Finland, Iceland, Norway,
Erkki LiikanenSweden
Minister of Finance
Finland
14.Mr. Eduardo MayobreCosta Rica, El Salvador, Guatemala,
PresidentHonduras, Mexico, Nicaragua,
Instituto de Comercio ExteriorPanama, Spain, Suriname, Venezuela
Venezuela
15.His ExcellencyAustria, Belgium, Hungary,
Philippe MaystadtLuxembourg, Turkey
Minister of Finance
Belgium
16.His ExcellencyJapan
Kiichi Miyazawa
Vice-Prime Minister
and Minister of Finance
Japan
17.His ExcellencyArgentina, Bolivia, Chile, Paraguay,
Cesar RoblesPeru, Uruguay
Minister of Economy and Finance
Peru
18.His ExcellencyCyprus, Israel, The Netherlands,
H.O. RudingRomania, Yugoslavia
Minister of Finance
Netherlands
19.The HonorableBangladesh, Bhutan, India, Sri
N.D. TiwariLanka
Minister of Finance
India
20.His ExcellencyChina
Wang Bingqian
State Counsellor and
Minister of Finance
China
21.Mr. Sujitno Siswo WidagdoBurma, Fiji, Indonesia, Lao People’s
Managing DirectorDemocratic Republic, Malaysia,
Bank IndonesiaNepal, Singapore, Thailand, Tonga,
IndonesiaViet Nam
22.The HonorableAntigua and Barbuda, The Bahamas,
Michael H. WilsonBarbados, Belize, Canada,
Minister of FinanceDominica, Grenada, Guyana,
CanadaIreland, Jamaica, St. Kitts and
Nevis, St. Lucia, St. Vincent

Annex B. Agendas and Press Communiqués of Meetings Held in September 1987 and April 1988

Meeting of September 28, 1987

  • A. Agenda

    • 1. Enhancing Growth in the Developing Countries

    • 2. The Impact of the Industrial Policies of the Developed Countries on the Developing Countries

    • 3. Progress Reports

    • 4. Annual Report of the Committee

    • 5. Appointment of Executive Secretary

    • 6. Other Business

  • B. Press Communiqué (text published in Summary Proceedings, 1987, pages 261-64)

Meeting of April 15, 1988

  • A. Agenda

    • 1. Adequacy of all Forms of Resource Transfers to All Developing Countries to Enhance the Momentum of Their Development

    • 2. Environment and Development

    • 3. Progress Reports

    • 4. Other Business

  • B. Press Communiqué

    • 1. The Development Committee met in Washington, D.C., on April 15, 1988, under the chairmanship of the Hon. B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe.1

    • 2. Members discussed two broad issues:

      • —the adequacy of resource transfers to all developing countries, including the problems of the indebted countries

      • —environment and development, in particular the role of the World Bank.

    • 3. Members welcomed positive developments since the Committee’s last meeting, notably:

      • —the full effectiveness of IDA-8

      • —the establishment of the IMF’s enhanced structural adjustment facility (ESAF)

      • —the successful launching of the Special Program of Assistance by the World Bank for highly indebted low-income African countries

      • —the agreement by the Bank’s Executive Board for a $74.8 billion increase in the capital of the World Bank and its early approval by many Governors

      • —the coming into force of the convention establishing the Multilateral Investment Guarantee Agency (MIGA)

      • —the progress achieved by many developing countries in their adjustment efforts.

    • 4. In spite of these encouraging developments, members agreed that an enlarged volume of financial flows to the developing countries was required to meet the needs for economic growth, poverty alleviation, environmental conservation, structural adjustment, and the resolution of debt difficulties. There was also need for a more supportive world economic environment. They also agreed that the flow of resources, which for some countries has been negative, could be enhanced by policies and actions by both developed and developing countries. Improved aid coordination, further strengthening of the international financial institutions, improved prospects for commodity export earnings, and reduction of protectionist measures would contribute toward increased resource flows. Members urged early progress toward trade liberalization in the Uruguay Round and stressed the importance of the midterm ministerial meeting. The Committee agreed that appropriate economic policies in the developing countries, including increased efforts to mobilize domestic resources, were essential. The IFC was encouraged to continue to expand its role in providing support and promoting private investment in the developing countries.

    • 5. The Committee called on those Governors who had not already done so to approve the resolution for a general capital increase for the World Bank as quickly as possible, and for all governments to proceed expeditiously to subscribe the necessary capital. The importance of the ongoing review by the Board of the Bank of the valuation of the Bank’s capital and the issue of the voting power of small member countries was underlined.

    • 6. The Committee also invited countries which had not so far made a contribution to the Fund’s ESAF to do so. Members urged eligible countries to continue to pursue or to adopt strong economic adjustment programs that could be supported by ESAF.

    • 7. The Committee recognized that additional efforts were required to ease the burdens and support the adjustment efforts of many debt-distressed, low-income countries and urged creditors and debtors to consider measures to this end, including, where possible, interest rate reduction in official reschedulings or alternative measures having a similar impact. It took note of the recommendations in the recent report by the UN Secretary General’s advisory group on financial flows to Africa. In addressing the special problems of low-income Africa, donors were urged to take as soon as possible the actions needed to translate their pledges of adjustment co-financing under the Bank’s Special Program of Assistance into firm commitments and disbursements to ensure as far as possible additionality in the flow of resources to countries which are or will become eligible. The Committee welcomed the recent increase in the resources of the African Development Bank and Fund.

    • 8. The Committee discussed the problem of debt in the heavily indebted middle-income countries in the context of the transfer of resources and the need for achieving sustained growth through adjustment programs. The Committee reaffirmed its support for a case-by-case market-oriented strategy. While strong economic programs were essential, resource constraints remained a major problem. The Committee noted some encouraging developments since the last meeting in the evolution of the menu approach, including the emergence of new financing options and voluntary market-based techniques which reduce the stock of debt. The Bank and the Fund, working closely together, were encouraged to continue their efforts in facilitating developments in the menu approach on a case-by-case basis and thereby catalyzing financial support for a growth-oriented debt strategy. The Committee agreed to keep the debt strategy under review so as to enhance the prospects for growth and development.

    • 9. The Committee recognized that greater flows and an improved quality of concessional resources were needed by low-income countries, including those not seriously indebted, to tackle the problems of poverty alleviation, sustained growth and development, and to assist adjustment efforts where needed. It was also recognized that a number of lower middle-income countries not referred to above have serious economic difficulties, including heavy indebtedness, which deserve attention by the international community.

    • 10. Members exchanged views on the important issues raised in the Brundtland report and welcomed the progress made by the World Bank in its environmental program. Growth, development, and environmental conservation must be seen as interrelated concepts and operational objectives. It was generally agreed that many environmental problems transcended national boundaries and therefore required action by developed and developing countries alike. The Committee particularly noted the close link between environmental degradation and poverty and recognized that substantial resources were needed to assist countries in dealing with these interrelated problems. The Bank was encouraged to provide further suggestions at a future meeting on how best to address poverty and environmental issues, especially in low-income countries. A progress report on the implementation of the Bank’s environmental program was requested for the next meeting.

    • 11. The Committee agreed to meet again in Berlin (West) on September 26, 1988.

Report I and the Resolutions contained within were adopted by the Board of Governors of the Fund, in Joint Session with the Board of Governors of the World Bank Group, on September 29, 1988.

See pages 28-31.

Resolution 43-5; see page 246.

Resolution 43-6; see page 246.

Democratic Kampuchea and South Africa did not participate in this election.

Report II dealt with the business of the Boards of Govenors of the World Bank Group. Report III and the recommendations contained within were adopted by the Boards of Governors of the Fund and the World Bank Group, in Joint Session, on September 29, 1988.

The Honorable Sheriff S. Sisay, Minister of Finance and Trade, The Gambia, served as Alternate Member to permit the Honorable B.T.G. Chidzero to serve as Chairman.

Mr. Barber B. Conable, President of the World Bank, Mr. Michel Camdessus, Managing Director of the International Monetary Fund, Mr. Yves Fortin, Executive Secretary of the Development Committee, and Mr. Mailson Ferreira da Nobrega, 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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