Interim Committee of the Board of Governors on the International Monetary System

International Monetary Fund. Secretary's Department
Published Date:
November 1992
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Press Communiqué—September 21, 1992

1. The Interim Committee of the Board of Governors of the International Monetary Fund held its thirty-ninth meeting in Washington, D.C. on September 20–21, 1992 under the chairmanship of Mr. Carlos Solchaga, Minister of Economy and Finance of Spain. The Committee warmly welcomed the many countries that have recently become members of the Fund.

2. In industrial countries, recovery is under way, but it remains sluggish and uneven, unemployment is unacceptably high, and recent exchange market tensions have increased uncertainty. Inflation and interest rates have declined significantly in a number of countries. The Committee observed that the recent currency turmoil forcefully illustrates the importance of reinforced policy coordination, a firm implementation of the medium-term strategy, and continuing efforts toward economic convergence in Europe. The Committee welcomed the actions recently taken to reduce market tensions and noted the resolve of major industrial countries to cooperate closely and to take appropriate additional actions as needed to strengthen growth without rekindling inflation and to foster greater currency stability. Mindful of the international implications of their policy actions, key countries need to cooperate closely in implementing measures to bolster confidence and improve the balance between their fiscal and monetary policies, thereby facilitating a narrowing of interest rate differentials.

Against this background, the Committee reaffirmed the importance of policies aimed at ensuring that the recovery gathers pace in an environment conducive to stronger, sustainable, noninflationary growth into the medium term. Monetary and fiscal policies should aim at a lasting decline in long-term interest rates through a reduction in public sector borrowing and a further lowering of inflation expectations. Vigorous action must be taken to eliminate structural rigidities that impede employment and productivity growth. An early, successful conclusion of the Uruguay round would be an invaluable contribution to this effort. Freer markets and a stable trading environment are essential to regenerating world economic growth, and to the success of the reform efforts of developing countries and economies in transition. It is a matter of concern that barriers to trade in industrial countries have increased since the commencement of the Uruguay Round negotiations.

3. The Committee welcomed the steady and successful implementation in many developing countries of sound macroeconomic policies and structural reforms. This has resulted in stronger growth, lower inflation, and increased per capita incomes, despite the weak international environment over the past year. This performance has been accompanied in a number of countries by a reversal of capital flight and substantial inflows of foreign investment. These countries’ adjustment and reform efforts need to be sustained and emulated by others. The Committee called for prompt international assistance to alleviate the dire consequences of the severe drought in southern and eastern Africa.

4. The Committee praised the progress being made by the countries of central and eastern Europe in reforming their economies under Fund-supported programs. There has been progress against inflation and there is some evidence that the sharp contraction of output may be coming to an end. Improved performance is being led by an expanding private sector and growing exports. However, the prolonged weakness of activity in some countries underlines the need to carry through further reforms quickly. In fact, in all former centrally planned economies, firm actions are needed to reinforce budgetary and monetary discipline, hand in hand with an acceleration of structural reforms, institution-building and privatization, and measures to foster increased domestic and foreign investment. Many of the states of the former Soviet Union have made major efforts to liberalize prices and prepare the framework for open market-oriented economies. The Committee welcomed the first Fund arrangements which have been negotiated with the Russian Federation and the Baltic countries. The task of building a wholly new economic system remains challenging, requiring both perseverance and external assistance, technical and financial. The availability of external financing will depend on the strength of the adjustment effort in each country. The Committee drew particular attention to the need for monetary reform and cooperation, whether in the context of the ruble area or of the establishment of new currencies. The setting up of efficient payments and settlements systems within and between the nations concerned should be a priority. More generally, the Committee called on these states to develop cooperation conducive to financial stability and free trade, consistent with the multilateral principles of their membership in the Bretton Woods institutions.

5. The Committee noted that the increasing number of strong programs of stabilization and reform in developing countries and in countries in transition to market economies renders the need for well-targeted international financial support particularly pressing. It invited member countries to support these efforts to the best of their ability.

6. The Committee welcomed the evidence of further gains under the debt strategy. A number of developing countries, however, have yet to secure decisive solutions to their debt problems. The Committee commended the Paris Club’s provision of greater debt relief for low-income countries in the framework of strong adjustment programs, and its readiness to consider a reduction of the stock of debt after a suitable period of adjustment. The Committee also encouraged the Paris Club to recognize the special situation of some highly-indebted lower middle-income countries on a case-by-case basis. The Committee commended those countries that continued to service their debt, often under difficult circumstances.

7. The Committee welcomed the extension to November 1993 of the period for commitments under the Fund’s enhanced structural adjustment facility (ESAF) and the Executive Board’s intention to review the effectiveness of ESAF programs and examine the options and operational modalities of a possible successor facility. It urged that this work be completed in good time before November 1993.

8. The Committee expressed deep concern that the proposed Third Amendment of the Articles of Agreement and the quota increases under the Ninth General Review had not yet entered into effect, despite continued progress in the number of member countries’ acceptances and consents. It strongly urged the members that have not yet completed their procedures to do so promptly, thus giving the Fund sufficient liquidity to continue to provide balance of payments financing in support of strong adjustment programs.

9. The Committee took note of the Executive Board’s work on the role of the SDR in the provision of international liquidity and requested that the Board continue to keep the matter under review.

10. The Committee agreed to hold its next meeting in Washington, D.C. on April 30, 1993.

Interim Committee Composition as of September 20–21, 1992—Carlos Solchaga, Chairman

Mohamed Abalkhail1Saudi Arabia
Ahmed Humaid Al-TayerUnited Arab Emirates
Pedro AspeMexico
Piero BarucciItaly
Nicholas F. BradyUnited States
Domingo Felipe CavalloArgentina
John S. DawkinsAustralia
Tsutomu HataJapan
Abdelouahab KeramaneAlgeria
W. KokNetherlands
Norman LamontUnited Kingdom
LI Guixian2China
Joash Mayanja-NkangiUganda
Philippe MaystadtBelgium
Donald MazankowskiCanada
Marcilio Marques MoreiraBrazil
NYEMBO ShabaniZaïre
Michel SapinFrance
Jón SigurdssonIceland
Manmohan SinghIndia
VIJIT SupinitThailand
Theo WaigelGermany

Alternate attending for member

Hamad Al-Sayari

Alternate attending for member


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