Chapter

Concluding Remarks1

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
October 1977
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Statement by the Alternate Governor of the Bank for Malaysia—Richard Ho Ung Hun

Malaysia accepts the Chairmanship of the Thirty-Third Annual Meetings of the World Bank and the International Monetary Fund as an honor to our people, our country, and our region.

We will strive to carry out the duties of the Chairmanship with the efficiency, warmth, and cordiality that characterized these meetings under the leadership of Mr. George Colley, Ireland’s Tánaiste and Minister for Finance.

The meetings we are now concluding have been fruitful in setting an agenda for progress in development and international monetary cooperation in the year ahead. I have confidence that the commitment to our joint goals shown here in Washington will lead toward their fulfillment.

I should like again to congratulate Mr. McNamara and Mr. Witteveen on their excellent leadership, reflected in the excellence of their institutions. I would also like to express my regret, and that of my country, that Mr. Witteveen will be leaving his post as the Fund’s Managing Director in the year to come.

Statement by the Governor of the Fund for Yugoslavia—Ksente Bogoev

Mr. Chairman, distinguished Governors, Mr. McNamara, Mr. Witteveen, ladies and gentlemen:

On behalf of my Government I should like to express our appreciation for the privilege accorded us by the Boards of Governors of the World Bank and the International Monetary Fund in accepting the invitation of the Federal Government of the Socialist Federal Republic of Yugoslavia to host the 1979 Annual Meetings of the Bank and the Fund in Belgrade.

I wish to assure you that we shall do our best to create all the necessary conditions for the work of such a distinguished gathering to be successful, and to make your stay in Belgrade a pleasant one.

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

Mr. Chairman, this has been a very useful week.

The topic that drew the main attention was the slow pace of recovery in the world economy. Clearly, our immediate task is to restore a satisfactory rate of recovery and expansion while continuing to make progress in reducing inflation. To accomplish this task, we must seek a more effective and symmetrical functioning of the international adjustment process. Over the past year, important actions have been taken by a number of deficit countries, and other such countries with large payments imbalances urgently need to follow suit. However, the expansionary impetus provided by surplus countries has not been sufficient to ensure achievement of a satisfactory rate of growth in world trade—one that would support and facilitate adjustment efforts by deficit countries.

The failure of domestic demand in some of the relatively strong countries to achieve adequate rates of expansion must now be corrected; adequate stimulation of demand and imports by these countries is a clear requirement of the present difficult situation. In addition, relatively strong countries in which domestic demand has been advancing at a satisfactory pace during the current recovery should maintain this performance; here, I have particularly in mind the United States, and it was most reassuring that President Carter, in his welcoming address, emphasized the commitment of the United States to the pursuit of vigorous, noninflationary growth in the period ahead.

Countries in a relatively weak position should continue their stabilization efforts. For these countries, resumption of satisfactory economic growth becomes possible to the extent that they succeed in bringing their inflation and balance of payments problems under control.

The broad strategy of policy that I have just sketched, and described more fully in my address last Monday, is in line with the recommendations on which we agreed last year. The problem we now face is that some aims of this strategy have not been attained.

I find a very broad measure of agreement that we should not change the strategy of policy; this is evident both from the communiqué of the Interim Committee issued last Saturday and from speeches of Governors in this hall. We have been blown off course; we now need to make the necessary adjustments to get back on course. We must promote a more satisfactory rate of expansion in the world economy while at the same time continuing our efforts to strengthen external positions and to bring down current rates of inflation, which in almost all countries are still much too high to be considered acceptable.

One of the very positive developments at this meeting was that Governors committed themselves anew to the pursuit of liberal trade and payments policies. This is a very important commitment. Protectionist trade measures, we all agree, must be strongly resisted.

It is most welcome that many Governors have expressed support for an increase in quotas under the seventh general review. Noticeable progress has been made toward a consensus on an increase large enough to enable the Fund to play its role in the financing of payments imbalances without an undue need to supplement its resources by borrowing. It also seems to me that there is a growing recognition that the ability of the Fund to provide conditional liquidity should grow alongside the balance of payments financing that is available from other sources, in particular, lending by private banks.

There has been universal appreciation of the supplementary financing facility. I already have some indications that the availability of this facility will induce members with large payments problems to undertake the necessary programs of adjustment. I am very pleased to announce, in this connection, that Nigeria has committed itself to make available to the Fund SDR 220 million for the facility; this brings the total commitments agreed so far to almost SDR 8.7 billion, or just over $10 billion. Commitments of this magnitude are a welcome sign of the cooperation among members.

Several Governors have referred in their speeches to Fund conditionality. This is a major aspect of Fund policy, and I want to say a few words about it. Members that approach the Fund for drawings in the higher credit tranches—and under the supplementary financing facility—do so because they are in a difficult payments situation. Such a situation will have to be remedied, whether the member draws on the Fund or not. Indeed, the availability of finance from the Fund allows the member to make the adjustment less abruptly and with less adverse impact on its own economy and that of others. The adjustment measures that are required in a particular case are worked out very carefully between a member and the Fund. Accordingly, the Fund’s conditionality takes account of the specific problems of the member—including its social and economic objectives—and allows enough time to bring about the necessary adjustment. The Executive Directors intend to review the Fund’s conditionality in the coming year, but I believe that the basic principles of conditionality that I have outlined must remain an integral part of the Fund’s operations.

Some difficulties have arisen concerning the date of March 21, 1978 as the time for convening the next meeting of the Interim Committee. In consultation with the Chairman, it is now envisaged that the Interim Committee will be convened on April 27, 1978 in Mexico City for a one- or two-day meeting.

For this meeting, the Executive Directors have been asked to submit appropriate proposals to the Committee with respect to the Seventh General Review of Quotas, together with draft recommendations to the Board of Governors. They have also been asked to report at this meeting on their study of the advisability at the present time of making further allocations of SDRs. In addition, at the request of the Interim Committee, the Executive Directors will review the characteristics and uses of the SDR so as to promote the purposes of the Fund, including the objective of making the SDR the principal reserve asset in the international monetary system.

As I end these remarks, I cannot fail to say how deeply touched I have been by the many very gracious comments made to me by Governors, in private as well as in public. What we have been able to accomplish together during these eventful years is a source of great satisfaction to me; it would not have been possible without your strong and unflagging support, both direct and through the distinguished persons you have chosen to be Executive Directors in the Fund.

Over these years, my conviction has grown that this is a strong, effective, and unique institution. I am confident that the Fund, sustained by the unfailing cooperation of its members, will prove capable of responding flexibly, as it has done so often in the past, to changing conditions in the world economy.

My final thought is to say to you, as the Governors of the Fund, that the international staff of this institution constitutes a resource of inestimable value. Its talent and devotion are essential in dealing with the difficult and complex problems we face together. Without these, the progress we made would not have been possible. An important task for the future will be to maintain the high standards of competence and dedication of the staff of our institution, in which it has been my privilege to serve.

I wish you all Godspeed on your journeys home and will look forward to extending our friendship in a personal capacity.

Statement by the Chairman of the Boards of Governors, the Governor of the Fund and the Bank for Ireland—George Colley

It has been a great pleasure for me to chair these Annual Meetings. I am indebted to my fellow Governors for the way in which they cooperated with me in keeping their statements brief and to the point.

I congratulate the Bank Governors on their widespread support for a general capital increase to permit the Bank to play a growing role and I hope an early start will be made in implementing it. That support represents a resounding vote of confidence in the institution and its leadership. Additional resources must be applied with imagination and maximum efficiency and in this respect I commend Mr. McNamara on the programs outlined in his opening address.

The achievement of developmental goals needs a common commitment to international economic cooperation and it also needs informed strategies. For this reason it is pleasing to note the support Governors have expressed for the commission to be launched by Mr. Willy Brandt. On behalf of all Governors I welcome Mr. Brandt’s acceptance of this important task. We look forward to the examination by the commission of the directions that international development planning should take if we are to maximize our common efforts.

I note a consensus among Governors in favor of paying greater attention to basic human needs, and of ensuring that the benefit of the Bank’s activities would accrue to the poorest sections of the community in the less developed countries. Prompt and efficient resource transfers are vitally important to them and many countries have expressed concern about the need for speedy disbursement of funds, including program lending, to ensure implementation of well-conceived growth strategies.

IDA will have an important role to play and I urge member governments to expedite the necessary procedures to enable it to do so.

IFC also faces important challenges. It was encouraging to hear expressions of support for its capital increase and for the expansion and diversification of its activities.

I have noted grave concern at the widespread level of unemployment, especially among young people. I think I have also detected a fear that lack of action designed to stimulate growth in the world economy over the next few months could plunge us into severe recession with all that that implies in the form of human suffering and the growth of protectionism.

There was a widespread consensus that those few countries with large external surpluses must stimulate domestic demand if there is to be any real hope of growth. The recently announced steps to stimulate growth in some of those countries were widely welcomed but there appeared to be some concern that these steps would not be enough to achieve their stated targets. I feel sure that there would be a general welcome for a commitment by the countries concerned that they would continuously monitor the progress of the measures they have taken and that they would be willing to act quickly to counteract any indications of a shortfall in reaching their announced targets.

But is the responsibility for the fate of the world economy to be laid on a handful of governments? The clear message of recent years is the interdependence of economies around the world—developed and developing. If growth is the primary need at present—and it is—then all who can must play their part. There is a human tendency exhibited by individuals to blame others for one’s own shortcomings. It is not unknown for some governments to exhibit the same tendency. But the primary responsibility for a people’s welfare rests on its own government—not on the IMF, the World Bank, nor the economic decisions of other governments. All of these can be very important but they do not absolve any government of its responsibility for its own people’s welfare. We must not, therefore, expect the small number of countries with strong external positions to do all our work for us. Many other countries can contribute to the growth of world trade, even to a limited extent, and they should do so. I am not, of course, advocating that the risks of fanning inflationary fires should be ignored in a headlong dash for growth. Indeed I would like to underline what was stated by Mr. Witteveen that one must have regard for the circumstances of the countries concerned and ensure that we do not rekindle the fires of inflation. I am, however, saying that I believe that a prudent assessment of external reserves and existing indebtedness would show that some countries with balance of payments deficits have some unused capacity for growth without spurring inflation. The obligation to use this capacity applies to all of us—even small countries like Ireland. In my country, we have embarked on a program very much on the lines suggested by Mr. Witteveen in his opening address. It is aimed at bringing about a deceleration in price increases through wage moderations, tax reductions, and other measures accompanied by strong efforts to create jobs for the unemployed—particularly young people.

Each one of us may feel his country’s contribution alone will make little difference but together our contributions could mean the difference between a major advance and a major recession.

It has also been encouraging to hear my fellow Governors voice unstinting support for the Fund as it prepares to undertake new responsibilities under its amended Articles of Agreement. Their words must now be matched by deeds. Let me again appeal for prompt action by those members who have not yet completed the legislative and other procedures required for accepting the proposed second amendment and for consenting to the increases in their quotas under the sixth general review.

Governors have welcomed the decision to establish the new supplementary financing facility. Here again it is to be hoped that the prospective lenders can conclude the necessary arrangements with the Fund so that the facility can become operational as soon as possible.

We have also heard at these meetings widespread support for a speedy completion of the Seventh General Review of Quotas. We will be looking forward to the recommendations of the Executive Directors, which are expected to be submitted for consideration by the Interim Committee at its next meeting.

It remains for me to express our appreciation to the people and Government of the United States who have once again extended to us their gracious hospitality. I should like also, on all our behalf, to thank the staffs of the World Bank and the Fund who have worked so hard and efficiently to make these meetings a success.

As I vacate this seat, I offer my best wishes to my successor, the Governor for Malaysia. In Ireland we have a saying in our own language when good friends part: “Slán abhaile agus go n-éiri an t-ádh libh,” which means good wishes and a safe journey home. It is my own personal wish to all of you, perhaps more particularly to Johannes Witteveen whose presence will be keenly missed. I now declare the thirty-second Annual Meetings of the World Bank and the International Monetary Fund adjourned.

Delivered at the Closing Joint Session, September 30, 1977.

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