Chapter

Concluding Remarks1

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
October 1973
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Statement by the Governor of the Fund and Bank for Ivory Coast—Henri Konan Bédié

It is a very great pleasure and a signal honor for Ivory Coast to have been selected to chair the Annual Meetings of the Governors of the World Bank Group and the International Monetary Fund next year. The fact that the chairmanship of these meetings has been entrusted to an African country is greatly appreciated, particularly at the meetings that are now being held here in Kenya, a country that deserves our gratitude and thanks for the gigantic efforts it has made for us and our institutions. We are happy that during the coming year we shall have the opportunity to work closely with Mr. McNamara and Mr. Witteveen to accomplish the goals which our organizations have set themselves, goals which are of crucial importance and whose attainment is necessary for the well-being of our peoples.

During the year ahead we hope to see the completion of the Fourth IDA Replenishment at the high level on which agreement in principle was reached last Tuesday, which will enable IDA to carry on its important mission. We are also hopeful that in the next twelve months the monetary reform issues still outstanding will be resolved on schedule in time for the 1974 Annual Meetings.

In conclusion, may I congratulate you, Mr. Chairman, on the exemplary manner in which you have presided over the meetings. The calmness with which you have guided our discussions is an example for me and for all future chairmen.

I look forward to the prospect of meeting you all again in Washington next year.

Statement by the Chairman of the Executive Board and Managing Director of the International Monetary Fund—H. Johannes Witteveen

We have had a stimulating week of discussions. Governors have expressed their views fully and frankly on many difficult economic issues that presently confront the world community.

Some people, I know, came to Nairobi with the hope that this Annual Meeting would produce a blueprint for a new international monetary system. It was never my expectation, however, that at this meeting we would be able to bridge completely the differences of opinion that still exist on major issues of reform. But I have no doubt that, with patience and goodwill, this important objective can be achieved in the months ahead.

I know from personal experience that international negotiations can be time consuming and sometimes frustrating. There are often sharp swings in mood before final agreement is reached, but these extremes of pessimism and optimism are rarely justified.

The current negotiations on international monetary reform are the most complex and difficult of any which I have experienced. We are still only in the middle of the negotiating process. As the distinguished Chairman of the Committee of Twenty noted in his report last Monday to the Board of Governors, “much has been achieved but much remains to be done.”

There is, I should emphasize, a broad measure of agreement on the basic principles of a new monetary system. We are agreed that this system should be based on stable but adjustable parities with provision for floating in particular circumstances; that arrangements for convertibility should be established; that the SDR should be the central reserve asset of the new system; that the volume of global liquidity should be brought under effective international control; that rights and obligations should apply symmetrically to deficit and surplus countries; and that the new system should take full account of the needs and aspirations of the developing countries.

Nonetheless, much work will be required to reach a common view on the means by which these broad objectives of reform are to be achieved. We must approach the forthcoming negotiations with full realization of the common interest of all nations in the restoration of internationally agreed rules. I share the belief of Secretary Shultz that a deep sense of commitment to an agreed code of international conduct is essential to any lasting monetary reform.

If the Committee of Twenty is to succeed in settling the issues of reform by its target date of July 31, 1974, the sense of urgency shown in Governors’ statements this week will have to be sustained, and then translated into action through decisions that can only be taken at the political level. The deadline which the Ministers have set testifies to their conviction that the necessary political decisions will be reached.

In their statements, several Governors have referred to the extensive amendment of the Fund’s Articles that will be necessary in order to give effect to the agreement on the reform of the international monetary system. Even before agreement is reached, we can undertake useful preparatory work, both in analyzing the operational implications of certain proposals and in providing experimental legal texts. This preparatory work, and its discussion by the Executive Directors, will have a number of benefits, including an acceleration of the subsequent task of drafting amendments to the Articles of Agreement. It may also bring to light consequential or secondary issues that will have to be resolved even if, as I hope, our future Articles will aim at as much flexibility as feasible.

While the negotiations on reform are proceeding, we face a continuation of the present difficult period of transition. In the exchange field, there is an absence of rules and procedures that are internationally agreed and observed. Many Governors, both in their public speeches and in private talks with me, have emphasized this weakness in the system, and they have stressed the difficulties that could arise from continued exchange market instability.

In this transitional period, it is the particular responsibility of the Fund to promote international cooperation and help preserve monetary order. Policy decisions in the exchange field must be taken with due regard to their effects on others. I therefore intend to explore in the immediate future the willingness of Fund members, particularly the industrial countries, to strengthen cooperation in the exchange field. New forms of consultation must be developed with a view to ensuring that the interests of all members are fully taken into consideration.

Apart from international monetary questions, the subject that has dominated the discussion of Fund matters this week has been inflation. From the statements that Governors have made on this subject, it is clear that the problem is world-wide. There is scarcely a member country in the Fund that is not experiencing historically high rates of inflation; and there is a widespread fear that a continuation of current trends would have serious economic and social consequences. Furthermore, it is recognized that continued inflation at present rates is incompatible with the achievement of stability in the international monetary system.

Many Governors have drawn attention to the importance of international influences in the transmission of inflation. I am struck by the number of countries that evidently have found their policies hampered by imported inflation. This has been attributable both to rising import prices and to the pressures generated by heavy surpluses in the balance of payments. At the same time, there is a widespread feeling that the recent instability of exchange rates has added to inflationary tendencies.

At least with respect to the international factors generating inflation, there are grounds for cautious optimism regarding the present outlook. There are now some signs that international commodity prices may have passed their peak. More basically, as a result of the currency realignments of December 1971 and early 1973, we should witness a much closer approach to international payments equilibrium during the course of 1974. Prospects for eliminating the deficit in the U.S. balance of payments, and thus for achieving a fundamental restraint on the growth of international liquidity, now seem quite good.

Although, as I noted in my opening address, the international monetary climate could therefore become more favorable, the battle against inflation must be carried out primarily through national economic policies. Because of their dominant position in the world economy, the major industrial countries have a special responsibility to reduce inflation within their borders. Statements made at this meeting display a general determination to fight inflation, and I hope that the determination expressed by individual Governors will be effective and mutually reinforcing.

I have left until last, Mr. Chairman, my thanks to the Government and people of Kenya for the magnificent facilities and generous hospitality we have enjoyed in this beautiful city of Nairobi. All of us, I am sure, have looked forward with keen anticipation to these first Annual Meetings on the continent of Africa. I know I speak for everyone in this hall when I say that our expectations have been more than fulfilled.

In conclusion, I should like to thank Governors for the many good wishes and assurances of support which they have been kind enough to express. We leave Nairobi with much work on our agenda for the coming year. Let us also leave with a strengthened will to achieve solutions that will justify the trust which the peoples of our member countries have placed in us.

Statement by the Chairman of the Boards of Governors, the Governor for Trinidad and Tobago—George M. Chambers

We will long remember our discussions at these Annual Meetings of the World Bank Group and of the International Monetary Fund, and the congenial and hospitable settting in which they took place. The inspiring words of President Kenyatta, the powerful plea by Mr. McNamara on behalf of the least advantaged, and the arguments for economic order from Mr. Witteveen, set a constructive tone of urgency which has been maintained throughout the week.

I join the many Governors who have applauded Mr. McNamara’s thesis of an equitable distribution of the fruits of development, his emphasis on the strategy for and the priority to be given to rural development, and his insistence on tackling the problems of urban communities in the developing countries of the world.

Many Governors have stressed the interdependence of economic development and monetary policies, and of the problems of trade. They have been heartened, as I have, by the decisions on trade negotiations taken at Tokyo. Governors have commended the Bank Group for its increased flexibility and for its readiness to tackle projects in new sectors and have put forward interesting suggestions concerning commodity schemes and buffer stock financing which, I am sure, both the Bank and the Fund will continue to study.

There was new evidence of the commitment by Governors and by the international community to contribute meaningfully toward the alleviation of the harsh living conditions of the world’s poor, the absolute poor—to use the appropriate phrase of Mr. McNamara. On Tuesday I was able to announce with great pleasure and satisfaction that the Deputies had agreed to the Fourth IDA Replenishment. I hope that acceptance by the Board of Governors and the necessary Parliamentary approvals will be expedited. I urge Governors of the countries concerned to take back to their Governments the message of this assembly that nothing should stand in the way of speedy final approval of the Fourth IDA Replenishment at its new higher level.

Having worked with Mr. Witteveen at these meetings, I am confident that he will prove to be a vital asset to the international community and to the Fund in the challenging tasks that confront us.

With respect to the reform of the international monetary system, I believe we can take encouragement from the outcome of our deliberations during the week. We had before us the promising First Outline of Reform produced by the Committee of Twenty. It is true that this report did not cover all the ground which we had hoped for at our meeting in Washington last year; but it showed that substantial progress has already been achieved and it identified clearly the framework of the proposals for reform and the principal problems outstanding. Governors stressed the serious risks to the growth of world trade which could arise from the existing unsettled conditions in the international financial system. The developing countries are particularly vulnerable in this regard. Governors gave clear directions and guidelines to the Committee of Twenty which, itself, set as its target the resolution of the principal issues involved by July 31, 1974—a decision which all Governors endorsed.

Many Governors from developed as well as developing countries have urged that the reformed monetary system should provide for the incorporation of an appropriate form of link between SDR allocations and development finance—although I recognize that there has not yet emerged unanimity on this important subject. The hopes of those convinced about the link may be realized as a result of the continuing studies of the link and other issues in monetary reform by the Deputies of the Committee of Twenty in cooperation with the Executive Board of the Fund.

It is encouraging to note also that consideration will be given to the establishment of a new facility in the Fund for longer-term balance of payments support.

We come to the end of our 1973 Annual Meetings. On behalf of myself and all Governors I once again heartily thank the President of our host country, His Excellency Mzee Jomo Kenyatta, for his opening statement and also most warmly praise the Government and people of Kenya for their friendly reception and kind hospitality. In saying good-bye, I look forward to meeting you all again at our meetings in Washington a year from now.

I now declare the 1973 Annual Meetings of the Boards of Governors of the International Bank for Reconstruction and Development and its affiliates and of the International Monetary Fund adjourned.

Delivered at the Closing Joint Session, September 28, 1973.

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