Chapter

Reports of the Joint Procedures Committee

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
October 1977
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ChairmanIreland
Vice ChairmenBolivia

Togo
Reporting MembersEgypt

Other Members: Austria, Bangladesh, Barbados, Brazil, Costa Rica, Fiji, France, Federal Republic of Germany, Indonesia, Japan, Mauritania, Pakistan, Romania, Sierra Leone, United Arab Emirates, United Kingdom, United States

Report II1

September 29, 1977

Mr. Chairman:

At the meeting of the Joint Procedures Committee held on September 29, 1977, the items of business on the agenda of the Board of Governors of the International Monetary Fund were considered.

The Committee submits the following report and recommendations:

  • 1. 1977 Annual Report

The Committee noted that provision had been made for the annual discussion of the business of the Fund.

  • 2. Report of the Chairman of the Interim Committee

The Committee noted the presentation made by the Chairman of the Interim Committee.2

The Committee recommends that the Board of Governors of the Fund thank the Interim Committee for its work.

  • 3. Report of the Joint Development Committee

The Committee noted that the report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee) has been presented to the Boards of Governors of the Bank and Fund pursuant to Resolutions Nos. 294 and 29-9 of the Bank and Fund, respectively (Fund Document No. 5) [Annex I].

The Committee recommends that the Board of Governors of the Fund note the report and thank the Development Committee for its work.

  • 4. Financial Statements, Report on Audit, and Administrative Budget

The Committee considered the Report on Audit for the fiscal year ended April 30, 1977, the Financial Statements contained therein (Fund Document No. 6 and Appendix VIII of the 1977 Annual Report), and the Administrative Budget for the fiscal year ending April 30, 1978 (Fund Document No. 8 and Appendix VI of the 1977 Annual Report).

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 7.3

  • 5. Amendments of Rules and Regulations

The Committee has reviewed and noted the letter of the Managing Director and Chairman of the Executive Board to the Chairman of the Board of Governors, dated September 26, 1977, regarding amendment of the Rules and Regulations, reproduced as Fund Document No. 9 [Annex II].

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Attachment 2 of Fund Document No. 9.4

  • 6. Applications for Membership

    • (a) Maldives. The Committee has considered the recommendation of the Executive Directors regarding the admission of Maldives to membership in the Fund, set forth in Fund Document No. 10 [Annex III].

      The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 10.5

    • (b) São Tomé and Principe. The Committee has considered the recommendation of the Executive Directors regarding the admission of São Tomé and Principe to membership in the Fund, set forth in Fund Document No. 11 [Annex IV].

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. II.6

Approved:

/s/ George Colley/s/ Aly M. Negm
Ireland—ChairmanEgypt—Reporting Member

Annex I to Report II

September 25, 1977

Sir:

As Chairman of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee), I have the honor to present herewith to the Boards of Governors a report by the Committee on the progress of its work during the period July 1976-July 1977. The report is presented in compliance with Section 5(i) of the Bank Board of Governors’ Resolution No. 294 and the Fund Board of Governors’ Resolution No. 29-9, adopted on October 2, 1974.

Sincerely yours,

/s/

Cesar E. A. Virata

Chairman

Development Committee

Attachment

The Honorable

George Colley

Chairman of the Boards of Governors

International Monetary Fund and the World Bank

Attachment

Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries

(July 1976-June 1977)

I. Introduction

1. This is the third annual report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee). It covers activities from July 1976 through June 1977.

2. During the year under review, the Development Committee continued its endeavor to promote better international understanding and consensus at a high political level as a means of facilitating decisions on the financial aspects of the broad questions of development and transfer of resources. Throughout the year close relationships were maintained with a number of international bodies concerned with development, many of which participated as observers in the Committee’s meetings.

3. The Committee held three meetings during the year: two in Manila on October 3 and 6, 1976, at the time of the Annual Meetings of the Boards of Governors of the Bank and the Fund, and the third in Washington in April 1977.

4. The October 3 meeting in Manila was the occasion of a review of the Committee’s past two years of work and of discussion of its future work program. The review of the Committee’s work was based on a report called for by the Committee from the Executive Directors of the Fund and the Bank. The joint report of the two Boards reaffirmed the view that the Committee should be a useful forum for the discussion of issues relating to the transfer of real resources. It envisaged no change in the mandate of the Committee but suggested several operational improvements. Further, because the period of the Committee’s operation had been brief and affected by special events, the Executive Directors in their report recommended that the Boards of Governors of the Fund and the Bank make a review at the end of four years from the effective date of their parallel Resolutions with which the Committee was established in October 1974. This report was agreed to by the Committee and the Boards of Governors.

5. The Committee also considered a report from its Working Group on Access to Capital Markets and adopted the Group’s recommendations to governments on a number of measures to improve the access of developing countries to the capital markets of capital-exporting countries. Specifically, the Committee agreed that capital market countries would endeavor, as far as possible, to move toward liberalization of capital movements, and, in the meantime, would afford favorable treatment to the bond issues of developing countries. A Working Group on Development Finance and Policy was established to review a World Bank study on the proposed International Resources Bank, and to examine official development assistance on a continuing basis, including measures to improve its volume, quality and distribution. The Committee’s strong support for the timely completion of the Fifth Replenishment of IDA was reaffirmed.

6. At its October 6 meeting, the Development Committee unanimously elected the Honorable Cesar E.A. Virata of the Philippines as its Chairman. Thanks and appreciation were expressed for His Excellency Henri Konan Bédié’s work as Chairman of the Committee during its first two years. The Committee also appointed Sir Richard King, of the United Kingdom, to serve as Executive Secretary.

7. At the Washington meeting in April 1977, the Chairman, in his opening address, outlined his views on the future role of the Committee and sought members’ response and suggestions in this regard.

8. There was general agreement that the Committee should concentrate on a limited number of particular topics of appropriate and urgent concern of Finance Ministers.

9. As regards the substance and content of the Committee’s future work, there was endorsement of the work underway in the two Working Groups and in this connection attention was drawn to the need to increase flows of ODA; the lending programs, the resources position and the arrangements for replenishing the international financial institutions (IFIs); the importance of private flows; and the need for the mobilization of domestic resources and other appropriate domestic policies to ensure effective use of external assistance. Interest was also expressed in a presentation of the needs for and availability of development finance against the background of the trade situation confronting developing countries. It was thought that such a presentation could be of advantage as a background for the consideration of development flows.

10. It was generally recognized that significant areas of activity could emerge on the conclusion of the North/South discussions in Paris where the Committee should stand ready to play a useful follow-up role, inter alia, in the areas of international indebtedness, ODA flows, the development of natural resources in developing countries including particularly energy resources, and the stabilization of export earnings. In order to ensure better preparation of subjects for Committee discussion, it was proposed to hold a meeting of Deputies prior to the next Committee meeting.

11. In addition to the three main Committee meetings, the Working Group on Access to Capital Markets met three times during the year and the Development Finance and Policy Working Group met once.

II. Committee Consideration During the Year of Major Questions Affecting Resource Transfer

12. The subjects considered by the Committee in the past year fall into the following three broad areas: the situation and prospects of developing countries and their external resource requirements, official development assistance, and access to capital markets.

Situation and prospects of developing countries and their external resource requirements

13. A study prepared by the IMF in July 1976 was discussed by the Committee at its Manila meeting. The study showed that the non-oil developing countries had a current account deficit of $37 billion in 1975.7 This deficit was financed to the extent of $19 billion by official capital flows, $4 billion by direct investment, $10 billion by borrowing from the market, especially from commercial banks, and the balance through borrowing by monetary authorities—mainly IMF credit—and the use of reserves. In 1976 and the first half of 1977, the deficit was expected to continue at a high level. The Committee noted that the low-income countries had had little or no growth in their per capita income since 1970 and that their levels of imports had fallen by some 20 per cent below those of the late 1960s. Official aid to them had been inadequate. Many developing countries, especially the middle-income countries, borrowed heavily to maintain the flow of imports and to avoid undue interruption of their development programs.

14. Against the background of the deficit projections noted above the Bank staff analyzed for the Committee in September 1976, the likely growth performance of the non-oil developing countries to 1985. Based on some assumptions about growth rates for the industrialized countries (around 5 per cent), about terms of trade and value of exports of non-oil developing countries, and about the availability of official capital from donors, it was thought that the growth rate for low-income countries would average about 4.2 per cent and for middle-income countries about 6.6 per cent per annum after 1978. This was expected to give rise to combined current account deficits on the part of non-oil developing countries of $37.4 billion in 1980 and $51.5 billion in 1985.8

15. It was recognized that most of the resources needed to meet the projected current account deficits of low-income countries must come from official sources and be on concessional terms. The middle-income countries should be able to obtain well over half of their required capital inflow from private sources and while most of them did not require large amounts of concessional assistance, they would be heavily dependent upon long-term financing from official sources in order to keep their overall debt burden manageable. There was also recognition that besides larger flows of external resources, there was need for a greater emphasis upon domestic policies attuned toward the necessary internal adjustment process.

Official development assistance

16. Two aspects of ODA were considered by the Committee: volume, and contributions to multilateral lending institutions. The Working Group on Development Finance and Policy considered a Secretariat paper on recent trends in the flow of official development assistance, and the Group’s views on the subject were reported to the Committee at the Washington meeting. The Secretariat paper presented three main conclusions: first, that the real volume of ODA had shown very little growth over the past decade and indeed expressed as a percentage of their GNP, DAC countries were contributing a good deal less than they had been ten years ago; secondly, again expressed as percentage of GNP, that the largest and richest donors were contributing less than the smaller, and in some cases, poorer donor countries; and thirdly, that the share of the low-income developing countries in ODA was disproportionately low in relation to their needs. Over the past ten years, ODA in nominal terms had gone up—from $5.9 billion in 1965 to $13.6 billion in 1975, but it had remained almost stagnant in real terms. As a ratio of GNP of the members of the DAC, ODA had declined almost steadily over the last decade and a half—from 0.53 per cent in 1961 to 0.30 per cent in 1973, registering some improvement thereafter to 0.36 per cent in 1975. The World Bank projected in 1976 on the basis of ODA commitments made and the known intentions of DAC donor countries, that net ODA disbursements as a ratio of GNP might be about 0.33 per cent in 1980. Net disbursements of ODA by OPEC donor countries in 1975 represented 1.35 per cent of their GNP.

17. In harmony with the conclusions of the initial report of the Development Finance and Policy Working Group, there was general agreement within the Committee on the urgency of achieving a substantial increase in the total volume of ODA. The role of multilateral flows was stressed, and several Members indicated that the Committee should be prepared to discuss increases in the capital of the World Bank and regional banks if the issues remain unresolved in the Boards of these institutions.

18. The Committee also urged that donor countries whose ODA as a proportion of their GNP was below the current average donor performance should recognize the urgent need to inform their legislatures and the general public of the situation, especially the needs of the poorest countries, with a view to mobilizing political support for expanding the volume of their ODA. It was generally agreed that the Committee should keep the volume of ODA continuously under review.

19. On the question of contributions to multilateral development institutions one problem was seen to be that of improving the procedures for replenishing the funds of these institutions so as to give them more timely and adequate resources. The Committee asked the Development Finance and Policy Working Group to examine the problem and the scope for improvement and report back to the Committee.

20. The Secretariat presented an updated version of an earlier paper on international development lending institutions. Clearly evident from the study was the importance of the capital replenishment needs of the World Bank and IDA, which together represented 65 per cent of multilateral lending in 1976. The study suggested that, if World Bank lending were held to an annual level of $5.8 billion, multilateral lending as a whole would show only very modest increases in real terms in 1977 and 1978, and would then actually decline. Moreover even this modest result would depend on the success of the Fifth IDA Replenishment in mobilizing resources at least equal in purchasing power terms to the Fourth Replenishment. Accordingly, at Manila the Committee expressed its strong support for a timely and satisfactory completion of the Fifth Replenishment of IDA. At the April meeting satisfaction was expressed at the agreements reached concerning the Fifth IDA Replenishment. The Committee foresaw a need to give attention to increases in the capital of the World Bank and of the regional banks.

Access to capital markets

21. The subject of improving the access of developing countries to international capital markets remained one of the Committee’s major interests during the year. The subject was very actively pursued in the Working Group on Access to Capital Markets, established by the Committee in August 1975. The primary areas of concern were (a) regulations and practices affecting access to capital markets, (b) multilateral guarantees, (c) co-financing, (d) technical assistance to developing countries seeking market access, (e) promotion of the bond issues of developing countries, (f) a possible International Investment Trust, and (g) improvement of information reporting systems on international stocks and flows.

  • (a) Regulations and practices affecting access to capital markets

22. The Working Group submitted to the Committee a number of recommendations designed to remove or reduce various restrictions upon access to capital markets that affect developing countries, and, as a result, resolutions concerning the treatment of developing country borrowers were adopted by the Committee. It was agreed that capital market countries would endeavor, as far as their balance of payments situation permitted, to move progressively toward greater liberalization of capital movements, and, in particular, of capital outflows. The Committee also resolved that, in the meanwhile, when regulations governing capital outflows are maintained for unavoidable reasons:

  • —governments of capital market countries would afford favorable treatment, as among foreign borrowers, to developing country borrowers with regard to permission to make an issue or secure a place in the issue calendar;

  • —those capital market countries which currently maintain quantitative limits on the amount of foreign issues in their markets would endeavor to keep developing country borrowers outside these limits, at least up to specified amounts;

  • —since the Eurobond market presents potential opportunities for developing countries to raise finance, countries whose currencies are in strong demand, and which maintain restrictions on international issues denominated in their currencies, would endeavor to give favorable treatment, as among foreign borrowers, to developing country borrowers.

23. The Committee noted a number of recommendations in the report that consideration be given to the removal of legal and administrative barriers. Specifically, the report recommended:

  • —that governments of capital market countries should generally agree, with due regard to the interests of the investors, to adopt a flexible attitude concerning rules and regulations which prescribe limits on the investments of institutional investors in foreign securities. They should agree to consider modifications of these rules as and when they seem to be proving a serious obstacle to developing country borrowing and to promote the necessary efforts in this regard;

  • —those countries which have complex statutory requirements for registration and listing of securities should attempt to administer their regulations in a flexible manner to the extent practicable in conformity with investor protection and other requirements of their laws.

Capital market countries were urged to give the recommendations their urgent consideration.

24. As a follow-up action on the agreement reached by the Development Committee at its meeting in Manila, the Executive Board of the IMF decided that IMF staff would, in the course of its regular consultations with the main capital exporting countries, inquire regarding the implementation of the Development Committee recommendations covering regulations and practices and that a brief report of the staff findings would be included in the staff report on consultation discussions.

  • (b) Multilateral guarantees

25. The Working Group on Access to Capital Markets had under active consideration the possible use of multilateral guarantees for bonds issued by developing countries on the “threshold” of market access, enabling them to stand on their own credit in the future. At an April 1976 meeting of the Working Group, it was agreed to focus on the possible use of the guarantee authority that now exists with international financial institutions but which has not recently been used. After consideration of the Working Group’s report on multilateral guarantees at the Committee’s Washington meeting, there was a consensus that the World Bank and the regional development banks should be prepared to consider requests for guarantees of bond issues from interested developing countries. It was generally considered that such guarantees could appropriately be in the form of partial guarantees and the Working Group was asked to explore this possibility further in consultation with the relevant bodies. In the light of the Committee’s discussions in Washington, the World Bank has indicated that it would be prepared to consider requests from member countries for guarantees on their bond issues.

  • (c) Co-financing

26. At its October 3 meeting in Manila, the Committee stressed the importance of co-financing by international and regional development banks as a means of augmenting private capital flows to some developing countries and urged that co-financing arrangements be further expanded.

  • (d) Technical assistance

27. The Working Group on Access to Capital Markets gave attention to the importance of technical assistance for developing countries seeking market access, and presented recommendations on the subject which were substantially adopted by the Committee. The Committee recognized the need to reinforce and expand technical assistance activities for developing countries seeking access to capital markets. It noted the bilateral programs already in the field and recognized the need to coordinate the implementation of present and future available services. Finally, it recommended that attention be given by the Board of IFC to the possibility of expanding the IFC’s activities in this field.

  • (e) Promotion of bond issues

28. At the April meeting satisfaction was expressed with the study by the Working Group on Access to Capital Markets on the promotion of bond issues. The consensus was that the Working Group should be asked to work out detailed arrangements, in consultation with the IFC, of a sustained, long-term program of promotion in the markets to facilitate the bond issues and placements of developing countries.

29. After consultations with international and regional organizations and with the private sector, the Working Group decided that the promotional program for the “education’ ‘ of potential investors should run parallel with technical assistance activities for “threshold” developing countries seeking entrance or expanded access to capital markets. Promotion and technical assistance were considered to be complementary and integral parts of a single program. This close relationship encouraged the view that the IFC, which had already been asked to expand its technical assistance activities in this area, should take primary responsibility for the promotion program as well. This possibility has now been discussed with the management of the IFC. An outline of the proposed program has been agreed upon and the management have stated that the IFC would be prepared, if requested, to test the feasibility of this program by working with a few countries where there was a concrete need for assistance and a reasonable chance of success.

  • (f) International Investment Trust

30. The Committee considered a suggestion for the establishment of an International Investment Trust to encourage additional foreign portfolio investments in the securities of developing countries. The consensus of the Committee was that further consultations on the idea were needed with both developed and developing countries. Together with the IFC, the Executive Secretariat has accordingly held consultations with certain interested governments on future steps that might be taken with regard to the proposal, and the matter will be considered further by the Committee.

  • (g) Information flows

31. As a result of interest expressed at the Manila meeting in statistical reporting systems on international financial stocks and flows, the Working Group examined various aspects of this subject. It concluded that there had recently been substantial improvement of existing information systems, but that, despite the improvements in individual systems and the resultant benefits to the overall statistical framework, there nevertheless remained difficult problems of reconciliation between the systems of the IMF, the World Bank, and the BIS. While recognizing that the pace of further improvement would be governed mainly by technical factors, the Group felt that a momentum toward achieving technical improvements exists. It presented a number of recommendations to the Committee at its Washington meeting which were viewed with approval. These recommendations included reaffirmation of the importance the Committee attached to improved information flows. It asked all governments to give their fullest cooperation to the efforts of international bodies to improve the reporting systems for which they were responsible.

III. The Task Ahead

32. The period under review was one of considerable international activity in the field of North-South relations. It spanned a time from the fourth UNCTAD session to the conclusion of the Conference on International Economic Cooperation (CIEC) in Paris. In the aftermath of the world economic upheavals of 1974 and 1975 the period has been beset with serious problems of adjustment both for the industrial and for the developing countries. Some short-term solutions were devised by the international community to help meet the crisis and the focus is now shifting to longer term solutions such as increased flows of public and private resources and a new range of domestic policies. The problems are complex, and solutions are not easy. But as a result of the intensive international dialogue, there is now a clearer recognition both of the dimensions of the problems and of the urgent need to resolve them. This indeed was the main message of the CIEC. The Conference has now concluded and there are many subjects of importance on which follow-up action is envisaged in the Development Committee and other relevant international fora.

33. Those subjects which might be pursued in the Development Committee include various matters relating to the access of developing countries to capital markets, private foreign investment, export-earnings stabilization, energy resource development, continued consideration of some aspects of official development assistance, and possibly indebtedness. The precise nature of the Committee’s work program in these areas and the priority to be assigned to them will need to be decided.

34. The Development Committee remains a useful forum for constructive discussions at a high political level among the developed, oil-exporting and other developing countries. It has continued to exercise a comprehensive overview of international activities in the field of development and has provided support at the political level of government to negotiations being conducted in other international fora. It has contributed to the broader understanding of the international economic situation and has made significant progress on some specific matters such as policy actions which should lead to improvements in access to capital markets. On the subject of official development assistance, where the need to achieve a substantial increase in volume is widely recognized, the Committee has begun serious consideration of various aspects including volume, distribution, terms and quality.

35. In short, the Committee appears both ready and able to lend its political weight to a more productive and significant advance in international economic cooperation in many areas of mutual interest in this increasingly interdependent world.

Annexes

A. Members of the Committee

B. Organizational and Administrative Aspects

C. Text of parallel IBRD and IMF Resolutions establishing the Development Committee (see Summary Proceedings, 1975, pages 278-82).

D. Agendas and Press Communiqués of Meetings held during 1976-77.

Annex A

Members of the Committee
MemberCountries
1.The Honorable

Abdlatif Y. Al-Hamad

Director General

Kuwait Fund for Arab Economic Development

Kuwait
Bahrain, Egypt, Iraq, Jordan,

Kuwait, Lebanon, Socialist People’s

Libyan Arab Jamahiriya, Pakistan,

Qatar, Saudi Arabia, Somalia,

Syrian Arab Republic, United Arab

Emirates, Yemen Arab Republic
2.His Excellency

Hans Apel

Federal Minister of Finance

Germany
Germany
3.The Honorable

W. Michael Blumenthal

Secretary of the Treasury

United States
United States
4.His Excellency

Hideo Boh

Minister of Finance

Japan
Japan
5.His Excellency

Robert Boulin

Minister Delegate to the Premier

for Economy and Finance France
France
6.His Excellency

Jorge Cauas

Ambassador of Chile

to the United States

Chile
Argentina, Bolivia, Chile,

Ecuador, Paraguay, Uruguay
7.His Excellency

Willy De Clercq

Minister of Finance

Belgium
Austria, Belgium, Luxembourg,

Turkey
8.His Excellency

W.F. Duisenberg

Minister of Finance

The Netherlands
Cyprus, Israel, Netherlands,

Romania, Yugoslavia
9.The Right Honourable

Denis W. Healey, M.B.E., M.P.

Chancellor of the Exchequer

United Kingdom
United Kingdom
10.His Excellency

Franklin E. Hope

Minister of Finance

Guyana
Brazil, Colombia, Dominican

Republic, Guyana, Haiti, Panama,

Peru, Trinidad and Tobago
11.The Honorable

Bernal Jiménez

President

Central Bank of Costa Rica

Costa Rica
Costa Rica, El Salvador, Guatemala,

Honduras, Mexico, Nicaragua,

Venezuela
12.His Excellency

Henri Konan Bédié

Minister of Economy and Finance

Ivory Coast
Benin, Cameroon, Central African

Empire, Chad, Congo (People’s

Republic of), Equatorial Guinea,

Gabon, Ivory Coast, Madagascar,

Mali, Mauritania, Mauritius, Niger,

Rwanda, Senegal, Togo, Upper Volta,

Zaïre
13.The Honorable

Donald S. Macdonald

Minister of Finance

Canada
Bahamas, Barbados, Canada, Grenada,

Ireland, Jamaica
14.His Excellency

Major General (Eng.) Rtd.

Nasr-Eldin Mustafa

Minister of National Planning

Sudan
Botswana, Burundi, Ethiopia, The

Gambia, Guinea, Kenya, Lesotho,

Liberia, Malawi, Nigeria, Sierra

Leone, Sudan, Swaziland, Tanzania,

Uganda, Zambia
15.Her Excellency

Lise Østergaard

Minister without Portfolio

Ministry of Foreign Affairs

Denmark
Denmark, Finland, Iceland, Norway,

Sweden
16.The Honorable

H.M. Patel

Minister of Finance

India
Bangladesh, India, Sri Lanka
17.The Honorable

Rachmat Saleh

Governor

Bank Indonesia

Indonesia
Burma, Fiji, Indonesia, Korea,

Lao People’s Democratic Republic,

Malaysia, Nepal, Singapore,

Thailand, Viet Nam
18.The Honorable

Gaetano Stammati

Minister of the Treasury Italy
Italy, Malta, Portugal, Spain
19.The Honorable

Cesar E.A. Virata

Secretary of Finance

Philippines
Australia, New Zealand, Papua

New Guinea, Philippines, Western

Samoa
20.His Excellency

Mustapha Zaanouni

Minister of Planning

Tunisia
Afghanistan, Algeria, Ghana,

Greece, Iran, Morocco, Oman,

Tunisia, Yemen (People’s Democratic

Republic of)

Annex B

Organizational and Administrative Aspects

Establishment: The Development Committee was formally established pursuant to Bank Governors’ Resolution 294, October 2, 1974 and Fund Governors’ Resolution 29-9, October 2, 1974. At the inaugural meeting of the Committee held October 2-3, 1974, Mr. Henri Konan Bédié, Minister of Economy and Finance of the Ivory Coast, was selected as Chairman, and Mr. Henry J. Costanzo, Executive Vice President of the Inter-American Development Bank, was appointed Executive Secretary. At the seventh meeting of the Committee, held October 6, 1976, Mr. Cesar E. A. Virata, Secretary of Finance of the Philippines, was selected as Chairman. Sir Richard King, Permanent Secretary of the Ministry of Overseas Development of the United Kingdom, was appointed Executive Secretary in place of Mr. Costanzo who had resigned in April 1976.

Secretariat: As provided in the basic Resolutions, a small Secretariat has been established to assist the Executive Secretary. As of June 30, 1977, it consisted of two Deputy Executive Secretaries, two Assistant Executive Secretaries, and one Deputy Assistant Executive Secretary.

Working Group on Access to Capital Markets: In order to help facilitate and expand the access of developing countries to capital markets, a Working Group on Access to Capital Markets was organized in August 1975. Until October 6, 1976, it operated as a twelve-member Group consisting of representatives of the constituencies headed by Canada, France, Germany, Japan, Korea, Kuwait, Netherlands, Philippines, Trinidad and Tobago, United Kingdom, United States, and Venezuela. From October 6, 1976, Guyana, Indonesia, and Sudan took the places of Trinidad and Tobago, Korea, and the Philippines as representatives of constituencies. At the April 1977 meeting of the Committee it was decided that representatives from all twenty of the Committee’s constituencies should in future participate in the Working Group. The Working Group met three times during the year under review.

Working Group on Development Finance and Policy: At the October 3, 1976 meeting of the Committee a Working Group on Development Finance and Policy was established. All of the Committee’s constituencies are represented in the Working Group. The Group was initially to consider the study requested of the World Bank on the proposed International Resources Bank. In addition, the Group could be assigned other specific matters, including the volume, terms and distribution of official development assistance. The Group met once during the year under review.

The Working Groups are required to present their conclusions and recommendations for the consideration of the Committee.

In both the Working Group on Development Finance and Policy and the Working Group on Access to Capital Markets, representatives of various international bodies concerned with the matters under consideration participate as observers.

Relations with other organizations: The organizations listed below were official observers to the Development Committee during 1976-77. In addition, the Government of Switzerland was represented by an observer.

  • African Development Bank

  • Arab Bank for Economic Development in Africa

  • Arab Fund for Economic and Social Development

  • Asian Development Bank

  • Commission of the European Communities

  • Development Assistance Committee

  • European Investment Bank

  • General Agreement on Tariffs and Trade

  • Inter-American Development Bank

  • Islamic Development Bank

  • Organization for Economic Cooperation and Development

  • United Nations

  • United Nations Conference on Trade and Development

During the year, members of the Executive Secretariat participated as observers in meetings of the African, Asian and Inter-American Development Banks, as well as in the Development and Financial Affairs Commissions of the Conference on International Economic Cooperation.

Annex C

The text of the parallel IBRD and IMF Resolutions establishing the Development Committee is reproduced in Summary Proceedings, 1975, pages 278-82.

Annex D

Agendas and Press Communiqués of Meetings held during 1976-77

Meeting of October 3, 1976

  • A. Agenda (administrative items omitted)

    • 1. Report of Executive Directors of Bank and Fund on Review of Performance of Development Committee

    • 2. Future Work of the Committee in the Light of the Situation and Prospects of Developing Countries

    • 3. Interim Report of Working Group on Access to Capital Markets

  • B. Press Communiqué (text published in Summary Proceedings, 1976, pages 320-22).

Meeting of October 6, 1976

  • A. Agenda (administrative items omitted)

    • 1. Selection of Chairman

    • 2. Appointment of Executive Secretary

  • B. Announcement (text published in Summary Proceedings, 1976, page 324).

Meeting of April 27, 1977

Agenda (administrative items omitted)

  • 1. Role and future work of the Committee

  • 2. Status Reports:

    • a. IMF Developments

    • b. IDA Replenishment

    • c. IBRD Capital increase

  • 3. Access to Capital Markets: Further Report of Working Group

  • 4. Development Finance and Policy: Initial Report of Working Group No Press Communiqué issued.

Annex II to Report II

September 26, 1977

Dear Mr. Chairman:

In accordance with Section 16 of the By-Laws, the attached amendments of the Rules and Regulations are submitted for review by the Board of Governors.

Early in 1977 the Executive Directors undertook a detailed review of the Fund’s financial position. As a result of this review, the Executive Directors decided, with effect from April 1, 1977, to change some of the schedules of charges and to ensure that there will be a margin by which the rate of charge will exceed the rate of remuneration, and also to take other steps to strengthen the Fund’s financial position. These changes involved amendments of the Rules and Regulations, as follows:

Rule I-4(a) was amended to require members to pay charges promptly after the end of the quarter to which they relate rather than allowing a period of 30 days after the end of the quarter within which to pay.

Rule I-4(f) (3) (i) was amended to provide for an effective increase in the initial rate of charge of 3/8 of 1 per cent per annum on balances of members’ currencies held in excess of quota that have been acquired since June 30, 1974, except holdings resulting from use of the oil facility. The initial rate of charge was thus raised from 4 to 4.375 per cent per annum for the first 12 months, with rates progressing, as before, by an additional ½ of 1 per cent per annum for each subsequent 12 months, that is, to a rate of 6.375 per cent per annum for balances outstanding for five years. The amendment also provides for a prompt review of the Fund’s financial position if the margin of the initial rate of charge above the rate of remuneration is reduced to less than ¼ of 1 per cent or is increased to more than 1 per cent because of changes in the rate of remuneration. In these circumstances the Executive Board would take such action as it considers necessary to safeguard the financial position of the Fund; if a new decision is not taken as a result of this review on the rates of charge or on the rate of remuneration, the initial rate of charge shall be ¼ of 1 per cent or 1 per cent above the rate of remuneration, as the case may be. This decision shall also be reviewed if the Fund’s total annual income substantially exceeds its total annual expenses.

Rule I-4(g) (4), which relates to charges under the extended Fund facility pursuant to Rule I-4(f) (3) (iii), extends the progression of charges under the amended Rule I-4(f) (3) (i) to balances outstanding from five to eight years, which will reach the rate of the initial rate of charge under Rule I-4(f) (3) (i) plus 2.5 per cent per annum at the end of eight years. The amended Rule I-4(g) (4) requires the Fund to review the rate of charges on these balances when it reaches a level of 3 per cent above the initial rate.

The Executive Board has made no other changes in the Rules and Regulations since the last Annual Meeting.

Very truly yours,

/s/

H. Johannes Witteveen

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1977 Annual Meeting

International Monetary Fund

Attachment 1. Rules and Regulations Amended Since the 1976 Annual Meeting

  • 1. Rule I-4(a). Text as adopted April 8, 1977 and deemed to have come into effect April 1, 1977.

    • (a) As soon as possible after July 31, October 31, January 31 and April 30, the Fund shall notify each member by cable of the charges it owes to the Fund pursuant to Article V, Section 8(c) or (d), for the three calendar months ending on each such date. These charges shall be payable promptly after the end of the quarter to which they relate.

  • 2. Rule I-4(f) (3) (i). Text as adopted April 8, 1977 and deemed to have come into effect April 1, 1977.

    • (f) (3) With respect to each segment of the holdings of a member’s currency to the extent that it represents the acquisition of that currency by the Fund from July 1, 1974:

      • (i) The charge to be levied on each segment that is in excess of 100 per cent of quota and is not subject to (ii) below shall be 4 3/8 per cent per annum for the first 12 months; if the margin of the initial rate of charge above the rate of remuneration is reduced to less than ¼ of 1 per cent or increased to more than 1 per cent because of changes in the rate of remuneration pursuant to Rule I-9, the Executive Board will promptly review the Fund’s financial position, the rate of remuneration and the initial rate of charge and take such action as it considers necessary to safeguard the financial position of the Fund. If a new decision is not taken as a result of this review on the rates of charge or on the rate of remuneration, the initial rate of charge shall be ¼ of 1 per cent or 1 per cent above the rate of remuneration, as the case may be. The initial rate of charge shall rise by an additional ½ per cent per annum for each additional twelve months. This decision shall be reviewed if the Fund’s total annual income substantially exceeded its total annual expenses.

  • 3. Rule I-4(g) (4). Text as adopted April 8, 1977 and deemed to have come into effect April 1, 1977.

    • (g) The Fund and the member shall consider means by which the Fund’s holdings of the currency can be reduced whenever the Fund’s holdings of a member’s currency are such that

      (4) the charge under (f) (3) (iii) above applicable to any segment for any period has reached the rate of 6 per cent per annum. Thereafter, the charges shall rise in accordance with (f) (3) (i) above, provided that the rate shall not increase beyond the initial rate of charge under (f) (3) (i) above plus 2.5 per cent per annum when agreement is reached under this provision for repurchase within eight years after a drawing in accordance with Executive Board Decision No. 4377-(74/114). In the absence of agreement on means to reduce the Fund’s holdings, the Fund may impose such charges as it deems appropriate after the initial rate of charge under (f) (3) (i) above plus 2.5 per cent is reached. When an agreement for repurchase within eight years after a drawing is not reached or observed, the charges to be imposed shall rise in accordance with (f) (3) (i) above; provided that when the charges payable on any segment have reached the initial rate of charge under (f) (3) (i) above plus 3 per cent, the Fund will review the charges to be imposed thereafter. In the case of nonobservance, if the initial rate of charge under (f) (3) (i) above plus 2.5 per cent is payable on any segment at the date of nonobservance, it shall continue to be payable only for that part of a period of one year for which it has not yet been payable; and when the repurchases to which the nonobservance relates are made, or a new agreement for repurchase not later than eight years after the drawing is made, all charges in excess of the initial rate of charge under (f) (3) (i) above plus 2.5 per cent shall be reduced to the initial rate of charge under (f) (3) (i) above plus 2.5 per cent.

Annex III to Report II

September 26, 1977

Dear Mr. Chairman:

I am transmitting herewith on behalf of the Executive Board a proposed Resolution,9 which is recommended for adoption by the Board of Governors, on the admission of Maldives to membership in the Fund.

Very truly yours,

/s/

H. Johannes Witteveen

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1977 Annual Meeting

International Monetary Fund

Annex IV to Report II

September 26, 1977

Dear Mr. Chairman:

I am transmitting herewith on behalf of the Executive Board a proposed Resolution,10 which is recommended for adoption by the Board of Governors, on the admission of São Tomé and Principe to membership in the Fund.

Very truly yours,

/s/

H. Johannes Witteveen

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1977 Annual Meeting

International Monetary Fund

Report III1

September 29, 1977

Mr. Chairman:

The Joint Procedures Committee met on September 29, 1977 and submits the following report:

1. Place and Date of 1979 Annual Meetings

The Committee recommends that the invitation extended by the Government of Yugoslavia (Bank/IFC/IDA Document No. 4, Fund Document No. 12) [Annex I] be accepted, and that the 1979 Annual Meetings be convened in Belgrade, Yugoslavia.

2. Officers and Joint Procedures Committee for 1977/1978

The Committee recommends that the Governors for Malaysia be Chairmen, and the Governors for El Salvador and Norway be Vice Chairmen, of the Boards of Governors of the Bank and its Affiliates and of the Fund, to hold office until the close of the next Annual Meetings.

It is further recommended that a Joint Procedures Committee be established to be available, after the termination of these Meetings and until the close of the next Annual Meetings, for consultation at the discretion of the Chairmen normally by correspondence and, if the occasion required, by convening; and that this Committee shall consist of the Governors for the following members: Argentina, Canada, Colombia, El Salvador, France, Germany, Japan, Korea, Malaysia, Mauritius, Morocco, Norway, Saudi Arabia, Senegal, Turkey, United Kingdom, United States, Western Samoa, Yemen Arab Republic, Yugoslavia, and Zambia.

It is recommended that the Chairmen of the Joint Procedures Committee shall be the Governors for Malaysia and the Vice Chairmen shall be the Governors for El Salvador and Norway, and that the Governor for Canada shall serve as Reporting Member.

Approved:

/s/ George Colley

Ireland—Chairman
/s/ Abdel Moneim El Kaissouni

/s/Aly M. Negm

Egypt—Reporting Members

Annex I to Report III

September 26, 1977

Dear Mr. Chairman:

There is attached a letter which the Governors of the Fund and the Bank and Affiliates for Yugoslavia have addressed to me and to the President of the Bank and Affiliates formally inviting the organizations to hold their 1979 Annual Meetings in Belgrade. There have been no other invitations received with respect to the holding of the 1979 Meetings.

The Executive Directors of the Fund and of the Bank and Affiliates have recommended the acceptance of this invitation from the Government of the Socialist Federal Republic of Yugoslavia.

Very truly yours,

/s/

H. Johannes Witteveen

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1977 Annual Meeting

International Monetary Fund

Attachment

Belgrade, August 11, 1977

Mr. Robert S. McNamara

President, International Bank for Reconstruction and Development and Affiliates

Washington, D. C.
Mr. H. Johannes Witteveen

Managing Director

International Monetary Fund

Washington, D. C.

Gentlemen:

With reference to your cable dated July 30, 1977, and in harmony with our very good cooperation, we thought that we might suggest you to consider the possibility of holding the 1979 Annual Meetings of the International Monetary Fund and the World Bank and its Affiliates in Yugoslavia.

It is therefore, with great honour, that on behalf of the Government of the S.F.R. of Yugoslavia we extend formally this invitation to hold the 1979 Annual Meetings in Belgrade.

We are pleased to assure you that the prompt provision of visas and the expeditious customs clearance will be accorded by the Yugoslav Government to all the Governors, Executive Directors, Alternates, officers and employees of the International Bank for Reconstruction and Development and Affiliates and the International Monetary Fund as well as to all visitors from member countries or observers, and the spouses of all the foregoing.

Sincerely yours,

For the Government of the Socialist Federal Republic of Yugoslavia

/s/

Dr. Ksente Bogoev

Governor, National Bank of

Yugoslavia Governor for Yugoslavia International Monetary Fund
/s/

Momčilo Cemović

Federal Secretary for Finance

Governor for Yugoslavia

International Bank for Reconstruction and Development and Affiliates

Report I dealt with the business of the Boards of Governors of the Bank, IFC and IDA. Report II and the Resolutions recommended therein were adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the Bank, IFC and IDA, on September 30, 1977.

See pages 138-42.

Resolution No. 32-3, see page 252.

Resolution No. 32-4, see page 252.

Resolution No. 32-5, see pages 253-55.

Resolution No. 32-6, see pages 255-57.

Figures in this paragraph relate to the study prepared in July 1976. More recent projections are available in the IMF Annual Report, 1977.

Figures in this paragraph relate to the study prepared in September 1976. More recent projections are available in Prospects for Developing Countries, 1978-85 (Bank Report No. 1674, dated July 1977).

Resolution No. 32-5, pages 253-55.

Resolution No. 32-6, pages 255-57.

Report III and the recommendations therein were adopted by the Boards of Governors of the Fund and of the Bank, IFC and IDA, in Joint Session, on September 30, 1977.

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