Concluding Remarks 1

International Monetary Fund. Secretary's Department
Published Date:
October 1967
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Statement by the Chairman of the Executive Board and Managing Director of the International Monetary Fund. Pierre-Paul Schweitzer

Mr. Chairman, I want at the outset to express my admiration for the efficiency displayed by our hosts in the organization of these meetings. We are very conscious and appreciative of the hard work which this must have entailed on the part of everyone concerned. We have enjoyed splendid facilities and have met with unfailing courtesy. In our less preoccupied moments, we have been offered a range of entertainment which was most imaginatively planned. I am sure that all participants will leave with vivid impressions of this memorable city. To echo the words of the President of Brazil, who graciously honored us by inaugurating these meetings, we have indeed been received with open arms.

This past year has been a busy one for the Fund, and I have very little doubt—nor the slightest complaint—that the coming year will be equally busy for the Executive Directors and the staff.

This meeting has seen the fruition of the liquidity planning to which so much effort had been devoted in the past few years. It had been our preoccupation to steer this difficult and complicated exercise toward a result that would be technically adequate, would embody the necessary safeguards, and would be acceptable on the broadest possible basis. It is gratifying, therefore, that Governors have expressed their support for the Outline of the new facility, although some stated that they would have preferred a scheme somewhat different in certain aspects.

A major task now lies before the Executive Directors: to draft, on the basis of the Outline, the necessary amendments to the Articles and By-Laws for approval by the Board of Governors and subsequent ratification by member governments. I look forward to the active discussion of these questions in the Executive Board, which at the same time, in line with the Resolution, will devote its attention to such proposals as have already been made, or may still be made, on possible improvements in the Fund. In connection with both of these tasks, close consideration will be given to the many constructive comments made by Governors during the present meeting.

Another Resolution adopted by the Board of Governors asks the Fund staff to study the problem of stabilization of prices for primary products. No one can doubt the direct importance of this matter for the well-being of the overwhelming majority of Fund members. Certain aspects of this problem have been a preoccupation of the Fund for many years. Our compensatory financing facility, to which a number of Governors referred with approbation, can be regarded as one approach toward meeting at least some of the consequences of price instability and of other causes of short-run fluctuations in export proceeds. I welcome the invitation to study the stabilization of commodity prices in its broader aspects. In our study we shall, as requested in the Resolution, consult with the Bank. We also expect to benefit from the fact that a great deal of important work in this area has been done, and is currently going on, in other international bodies, such as UNCTAD and FAO.

In approaching the subject of price stabilization for primary products, one cannot be unaware of the discrepancy between the attention paid to this problem over the last 20 years and the paucity of workable solutions that have emerged. In recalling this fact, I do not want to create the impression that I am underrating the value of new and intensified study in this field by the staffs of the Bank and the Fund; but I do think that Governors should be reminded that there is no easy road toward fully satisfactory solutions of the problems related to the instability of commodity prices.

Mr. Chairman, I have noted that much of the discussion this week has dealt with issues to which I referred in assessing the world economic situation during my opening address. Governors have underscored the paramount importance of promoting the development process in the context of an expanding world economy. This is bound to strengthen the markets for primary commodities and to provide conditions encouraging the flow of capital to the developing countries and the diversification of their economies. I detect a strong community of view that, in the pursuit of global economic growth, both deficit and surplus countries have a responsibility to discharge in relation to international payments adjustment. In this connection, Governors from a number of industrial countries have made clear their preoccupation with the need to achieve an appropriate combination of policies for fostering satisfactory economic growth within a framework of domestic and external stability.

I should like to thank Governors for the many stimulating comments and suggestions which they have made during the past week. These will be the subject of careful attention in the Fund. It has been an absorbing meeting, and we all owe a debt of gratitude to the two Chairmen for the exemplary way in which it has been conducted. I should like to close these remarks by joining previous speakers in extending my congratulations to the Governor of Ceylon on his designation as Chairman of the Board of Governors in the year ahead.

Closing Remarks by the Chairman of the Board of Governors of the Fund, the Governor of the Fund for Norway2. Erik Brofoss

The time has come to close the Twenty-Second Annual Meetings of the Boards of Governors of the Bank and of the Fund.

I am sure that we had all of us been looking forward with great expectations to convening in the fascinating setting of this scenic, alluring, and pulsating metropolis. We shall be leaving with vivid and lasting memories of engaging and enchanting days. The soccer game added excitement to the joy of our stay.

The Governors have already adopted the Resolution expressing our appreciation to the Government and people of Brazil and the City of Rio de Janeiro. My Co-Chairman and I shall express our personal feelings of gratitude for the warm welcome and delightful hospitality which has been extended to us with such charming courtesy. The two Chairmen want to pay tribute to the Brazilian authorities for having discharged the duties of the host country in such a commendable and graceful way. We wish the Government of Brazil every success in realizing its aspirations to build a prosperous future for its great people.

We recognize and treasure the indispensable services and the untiring labors of the staff of the Bank and of the Fund, we compliment them on their model performance, we beg forgiveness for the exacting strains we impose upon them, and we wish them well-deserved days of restful relaxation.

I shall not attempt, in my capacity as your Chairman today, to make a formal summing up of the achievements of this Conference But with your permission, fellow Governors, I might offer a few personal reflections.

We have successfully brought to fruition the protracted deliberations on the much-heralded reform of the international monetary system. I am confident that, by adopting the Outline for the establishment of a new facility in the Fund, we have made a significant contribution to the organic development of this institution.

The formulas on which the Outline is based might differ greatly from the bold and sweeping ideas that served as the point of departure when the exercise first started. The more gratifying it is to record the approval which Governors have given to a new facility sui generis.

Reconfirming as we have the fundamental principles of universality and of nondiscrimination, we have dispelled the apprehension that once was widely shared that compartmentalization would turn the Fund into a divided house. In any future evolution it will be imperative that the unity of the Fund and its character of a world-wide organization be faithfully upheld. The democratic right of all members—large or small—to voice an opinion on cardinal issues and to be able to do so at all stages of preparation and at all levels is the very prerogative of membership in the Fund.

By placing this novel instrument of the SDR’s in the experienced and skillful hands of the Executive Board, the Managing Director, and the staff of the Fund, we shall have the benefit of proven administrative and technical competence. Over the two decades of pragmatic adaptation of our institution to the needs of a changing world, they have demonstrated their resourcefulness and their dedication to truly international service.

However, upon member countries will rest the ultimate responsibility for decisions on policies and will fall the praise of success or the onus of failure. The legal structure of the agreement and the managerial talents of the operators will be of little avail unless the enterprise is animated by a dynamic and genuine spirit of partnership in a joint venture. Indeed, only through our firm determination to exploit to the full the potentialities of this new facility as a means of solving the problem of any future shortage of international liquidity will the Twenty-Second Annual Meetings stand out as a landmark in the annals of our organization.

As of this moment all we can claim is that we have completed an initial stage of a continual search for improvements in the international payments system. Other projects should not distract our attention and energies from the overriding issue of the adequacy of world reserves.

The task now before us calls for such flexibility in the legal provisions so as to allow the Fund a margin of discretion in the implementation of the scheme.

I have no doubt that the Executive Board will be able to observe the time limit of the Resolution for the submission of the proposals for the necessary amendments to the Articles of Agreement. I trust that with utmost dispatch Governors will take action on the Board’s recommendations and governments likewise will seek to obtain ratification by parliaments. Time might be running short in preparing the ground for activation.

We would also recognize an equally urgent need for a reassessment of general economic policies. An ominous circle of man-made stagnation has in recent months had serious repercussions, in particular on developing countries but also on the smaller industrialized nations.

This unsatisfactory state of affairs accentuates one crucial aspect of the adjustment process and gives emphasis to the special responsibilities that rest upon the major industrial countries for the orderly functioning of an economic system based on an international division of labor which carries with it a strong element of mutual interdependence. In discharging national responsibilities for designing domestic economic policies, the impact of action and no less of inaction upon other countries has to be heeded.

We have welcomed the statements of the Governors of the leading industrialized countries where they visualized an early resumption of a more satisfactory rate of growth than was experienced in 1966 and early 1967.

I sincerely hope that this prospect will materialize. It would be most fitting and appropriate at this signal juncture in the life of our institution to reaffirm by deeds our faith in the fundamental principles as laid down in Article I of the constitution of the Fund, where its purposes and the objectives of policies are established. Economic policy must continuously be conducive to economic progress in a world which is one and indivisible.

A steadily expanding production in the industrialized countries will strengthen their capability to offer assistance to developing countries which, on their part, will more easily find outlets for their exports and at more remunerative prices. This is the best way of rendering help, since in the long-term perspective trade more than aid must be the sound basis of development.

In his report on the activities of the Bank and its affiliates, Mr. Woods gave us an assurance that projects already authorized will serve to solidify the economic foundations of many developing countries. The industrialized countries have, I am sure, taken note of his plea for additional support, not only in the form of more funds for IDA and the Bank but also by opening freer access to markets and by alleviating the strains imposed by a growing burden of foreign debt. A positive response will make possible a major breakthrough in the battle against destitution and despondency.

I now wish all of you a safe passage back to your respective home countries. The Twenty-Second Annual Meetings of the Boards of Governors of the Bank and affiliates and of the Fund stand adjourned.

Delivered at the Closing Joint Session, September 29, 1967.

See footnote on page 5.

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