Chapter

Concluding Remarks 1

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1974
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Statement by the Governor of the Bank for Venezuela—Gumersindo Rodríguez

It is a great honor for Venezuela to have been entrusted with the Chairmanship of the Boards of Governors for the coming year.

On behalf of my Government and of the people of Venezuela, I should like to express sincere appreciation for the high distinction awarded us by the decision of my fellow Governors.

For a country such as Venezuela, which is fighting within the third world for progress and justice, this honor granted us by developed and developing nations alike is proof of their confidence in us, imposing on us a great responsibility, which we shall essay to discharge in as satisfactory a manner as possible.

In a world that is undergoing a period of transition from underdevelopment to development and from injustice to international justice, our duty must be to contribute to the strengthening of these important public institutions whose actions are at the world level. It is to these organizations that we look for the initiation of an irreversible trend toward a new world economic order, in which the natural and technological resources of this planet will be utilized to the full, the external equilibrium of national economies will be preserved, and the fruits of economic progress will be equitably distributed among all nations.

The principal risks faced by the world today are largely the result of the absence of institutional mechanisms capable of ensuring better distribution and redistribution of the wealth and social income of the areas of greatest economic and technological potential. The lack of these mechanisms is one of the causes of concentration of the world’s wealth in the hands of a few privileged nations. Thanks to our determination, solidarity, and cooperation, we countries who are producers of oil and other primary products are narrowing this gap. We have been able to implement a number of programs for development, production, and employment that we had been putting off for a long time because our cheap exports were bringing in insufficient revenues. Purchases of the import component of these programs are recycling a substantial portion of oil revenues toward capital goods producing countries. We have also been able to cooperate on the solution of the balance of payments and capital formation problems of the developing countries through the World Bank, the International Monetary Fund, and the Inter-American Development Bank, and we should like to express our appreciation to Mr. McNamara, Mr. Witteveen, and Mr. Ortiz Mena for their public acclaim of our efforts.

The third world countries are resolved to make their way up to the basic consumption level hitherto denied them by their low income levels. Increased demand from these majorities, and the low productivity characterizing their basic consumer productions, are generating powerful inflationary pressures, intensified by the inflationary pressures caused by the excessive demand and noncompetitive practices of the developing countries.

The social forces abroad in the world make it inevitable that the aspirations of the vast impoverished majorities for greater purchasing power will triumph. If the struggle for productivity and production to satisfy the new realities of consumption is not won, the world will be enveloped in a wave of inflation that will penerate into every corner of the earth, undermining the entire social fabric and order of production.

The new forces in world society demand that the organizations of international public finance be strengthened in their financial power and in their moral authority over peoples. This is vital if they are to act as effective mechanisms for promoting equilibrium in the world’s economy in the short term, serve as a permanent stimulus to investment, production, productivity, and supply, and be strengthened in their role as mechanisms for transferring wealth and income from areas of greater economic and technological potential to the poorer countries.

In this way, it will be possible to achieve a world economy that is more abundant, better balanced, more just, and less inflationary. The countries that have accumulated greater wealth, technology, and power must therefore help to increase the resources available to these organizations and must distribute more of the decision-making power in them to the less developed countries. And to the extent that we are helped to improve our income levels, we will be in a better position to contribute in turn to the economic equilibrium and development of other poor countries.

I should like to conclude these words by acknowledging the solidarity of my fellow Latin American Governors with Venezuela and the honor they have bestowed upon us in selecting us as a candidate to preside over the next meetings of the Fund and the Bank. May I reiterate to all of my fellow Governors Venezuela’s gratitude for being chosen to chair these important meetings next year.

In conclusion, Mr. Chairman, may I congratulate you on the example you have given us in conducting these meetings. Your effectiveness in carrying out your duties is a challenge we are prepared to emulate with the greatest eagerness to serve our people and the progress of mankind.

Statement by the Governor of the Bank for the Philippines—Cesar Virata

It is a great privilege for the Philippines to be chosen by the Boards of Governors as the site for the 1976 Annual Meetings of the Bank and the Fund. We realize that this privilege also carries with it an important responsibility. We gladly accept this responsibility.

On behalf of my Government, I would like to assure this body that we shall do our best to have a fruitful annual meeting in 1976, and to make your visit to the Philippines a memorable one.

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

This Annual Meeting has taken place at a critical juncture in the world economy. Because of the complexity and severity of the problems facing governments everywhere, world-wide attention has been focused on our deliberations.

In reviewing the proceedings of the week, I want to note immediately the establishment of the Interim Committee and of the Development Committee. These important Committees have already held their first meetings, and I extend congratulations to Governor Turner on his election as Chairman of the Interim Committee, and to you, Mr. Chairman, for having been selected to chair the Development Committee.

Our discussions of Fund matters have been very constructive. They certainly have been effective in threshing out the various problems, in emphasizing the necessity of coming to grips with them, and in attesting to the crucial importance of international collaboration in the current difficult circumstances. Now it will be important to follow through—to translate principles and intentions into action.

The discussions this week have demonstrated and confirmed the widespread serious concern that is felt about the current rates of inflation. It is clear that member countries consider these rates intolerable and believe that failure to contain inflation would pose a major threat to their collective well-being.

In the situation of uncertainty that now prevails, with growth rates in the major industrial countries low or negative, it is also clear that programs to fight inflation cannot avoid the incurrence of certain risks. At this meeting, Governors have shown a full awareness of these risks and have ruled out severe recession and massive unemployment as a method of controlling inflation. In expressing the view that governments must be careful to avoid policies that might inadvertently lead to such unacceptable conditions, the Governors who spoke on this subject were, in effect, reaffirming a position previously taken by the Committee of Twenty, which in its communiqué after the January 1974 meeting in Rome stated the resolve of member countries to “pursue policies that would sustain appropriate levels of economic activity and employment, while minimizing inflation.”

In sum, with the problems of growth and inflation having become more severe than they appeared last January, the discussions at this meeting have pointed up the great and difficult challenge confronting member countries in the field of domestic economic policy. Efforts to overcome inflation will require courage and determination on the part of national authorities in pursuing a well-balanced and internationally consistent set of policies.

Our discussions this week have also focused on the general apprehensions that exist with regard to the huge disequilibrium in international payments. Although the issues in this area are varied and complex, statements by Governors have concentrated mainly on the problem of recycling surplus funds from the oil exporting countries to the large number of oil importing countries throughout the world that are now faced with very large deficits in their current account positions. This problem is obviously very important and, in my judgment, calls for new policy initiatives in the near future; in these, account should be taken of the ability of other countries besides the oil exporters to make funds available for the recycling effort.

Most of the Governors who spoke on recycling appear to agree on two central points. First, it would be neither realistic nor prudent to expect the private short-term money markets—principally the Eurodollar market—to continue playing as large a role in the recycling process as they have in the past. And second, the problem of recycling thus requires a bigger role for various forms of official financing, with the Fund having a primary responsibility in this field.

Beyond these two points, Governors offered various suggestions or proposals with respect to recycling. There is an urgent need to explore the issues in this area, and I therefore welcome the request of the new Interim Committee that the Executive Directors consider, as a matter of urgency, the adequacy of existing private and official financing arrangements; and that they report on the possible need for additional arrangements, including enlarged financing arrangements through the Fund, and make proposals for dealing with the problem. We in the Fund will give the highest priority to the preparation of analyses and proposals needed for this purpose.

The Executive Directors will also be concentrating on various other matters, such as the adjustment process, quotas in the Fund, and amendments of the Articles of Agreement, including amendments on gold and the link. These are among the subjects that the Interim Committee intends to discuss in its forthcoming meetings.

The statements by Governors this week have emphasized the strategic importance of international cooperation in the current difficult situation. As will be clear from my opening remarks on Monday, I agree wholeheartedly with this emphasis; indeed, I believe that international cooperation, prompted by a sense of economic interdependence among nations, is absolutely essential for overcoming the range of serious problems that now confront the world economy. Such cooperation requires member countries to take account of the interests of others in all their actions, in accordance with principles that are constantly being advanced in the Fund’s consultations with members.

It is the exercise of international cooperation—and this alone—that can give effect to the excellent speeches we have heard this week and lead to necessary action at both the national and international levels. I strongly hope that one important manifestation of this cooperation will be an expanded flow of concessional assistance to the many developing nations that find themselves in such desperate straits. We must combine our efforts to ease the difficulties of these nations and to help them maintain the momentum of economic development.

In closing, Mr. Chairman, I wish to express my appreciation for your admirable address that launched this meeting and for the effective manner in which you have conducted our proceedings. Also, I should like to congratulate the Governors for Venezuela who will succeed you in the year ahead.

I look forward to seeing all of you again next year in Washington.

Statement by the Chairman of the Boards of Governors, the Governor for Ivory Coast—Henri Konan Bédié

Since it is my privilege as Chairman of these meetings to have both the first and the last word, I shall use my advantage to review briefly the impressions I have received of these deliberations.

The seriousness of the world financial situation has been reflected in the somber tone of our meeting. Our discussions have fortified the mutual resolve to curb inflation without recession; committed us firmly to international monetary reform; and provided a deep, sincere, and constructive concern for the developing countries. We are fully resolved to tackle the problems of payments disequilibrium, and we wish to add to the strength of the Fund, among other things, by amending the Articles of Agreement.

Some Governors have expressed disappointment at the slow progress of monetary reform, the unchecked ravages of inflation, the failure to establish a link, and the inadequacy of resources available at tolerable terms for financing payments deficits. But even the Governors who have drawn our attention to the shortcomings of the international monetary system have done so because of the efficacy they see in a concerted attack on our monumental problems. Many Governors, in both the Fund and Bank, have appealed to the spirit of cooperation, the sense of responsibility and fair play, the determination, imagination, and creativity of world leaders. This gives me hope, and I am sure I am not alone in feeling a certain degree of cautious optimism.

We shall leave these meetings with new machinery to aid us in our tasks. The Interim Committee of the Board of Governors of the Fund has been inaugurated. We congratulate ourselves that the supervision of the international monetary system is in good hands pending the establishment of the Council.

The Joint Ministerial Committee of the Bank and the Fund on the Transfer of Real Resources to Developing Countries, of which I have the honor to be the Chairman, has also been inaugurated and has adopted an initial program of work, which I hope will be carried forward with energy on a constructive and helpful basis.

We have frequently heard at these meetings how the crushing burdens of inflation and material shortages weigh heaviest on the poorest countries and the people at the bottom of the pyramid of poverty. They are bewildered and fearful because they are hostages to forces over which they have little or no control. Since we seek to create an improved economic order, with greater stability and growth for all nations, these people must not become the forgotten millions. Never before has the interdependence of nations and people been so apparent.

The message from these important meetings is very clear. International aid has fallen in real terms. If we are to achieve stability and growth we must reverse this trend, we must stabilize the terms of trade for the developing countries, and we must close the resource gap to permit development to proceed on a just and equitable basis, all of which demands concrete action on our part.

To meet these objectives, I am confident that we can continue to rely on the Bank and its affiliates for new initiatives. We shall expect added assistance from the cooperative efforts of governments toward the restructuring of the flow of real resources.

We are heartened by the messages of Governors from the donor countries that every effort is being made to complete the arrangements to replenish IDA’s resources, which is so vital to the development programs of the poorest countries. Many Governors have noted too the important part that private capital can play in the development effort and of the valuable contributions which IFC can make.

I have noted with pleasure the considerable work that has been accomplished at these meetings and I wish to thank all Governors and their associates for their cooperation.

In conclusion, I wish you all Godspeed and look forward to meeting you again in 1975. The 1974 Annual Meetings of the Boards of Governors are adjourned.

Delivered at the Closing Joint Session, October 4, 1974.

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