Chapter

Reports of the Joint Procedures Committee

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
October 1976
Share
  • ShareShare
Show Summary Details
ChairmenSyrian Arab Republic
Vice ChairmenIndia

Upper Volta
Reporting MembersNetherlands

Other Members: Denmark, Dominican Republic, France, The Gambia, Federal Republic of Germany, Jamaica, Japan, Liberia, Mexico, Paraguay, Singapore, Spain, Sudan, Thailand, Tunisia, United Kingdom, United States

Report I1

October 4, 1976

Mr. Chairman:

The Joint Procedures Committee met on October 4, 1976 and submits the following report:

Review of Development Committee

The Committee considered the report of the Chairman of the Development Committee on the review by the Executive Directors of the Fund and of the Bank of the Development Committee’s performance (Fund Document No. 14 and Bank Document No. 8) [Annex I] and the resolutions recommended for adoption by the Boards of Governors of the Fund and the Bank (Fund Document No. 6/Bank Document No. 6) [Annex II].

The Committee recommends that the Boards of Governors adopt the draft resolutions set forth in Fund Document No. 62 and Bank Document No. 6.

Approved:

/s/ Mohammed Imady/s/ A. Szasz
/s/ Sadek Ayoubi/s/ W. F. Duisenberg
Syrian Arab Republic—ChairmenNetherlands-—Reporting Members

Annex I to Report I

October 3, 1976

Gentlemen:

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 authorized me, as Chairman, to present herewith to the Boards of Governors the Committee’s recommendation concerning the review of the Committee’s performance which is called for in Section 7 of Bank Board of Governors’ Resolution No. 294 and Fund Board of Governors’ Resolution No. 29-9, adopted on October 2, 1974.

The Committee recommends that, because the period of operations of the Committee has been brief and affected by special events, the Boards of Governors should further review the performance of the Committee at the end of four years from the effective date of the parallel resolutions, i.e., October 2, 1978.

A draft resolution to implement this recommendation, which was previously agreed by the Boards of Executive Directors of the Bank and the Fund, is attached.3 Also attached is a joint report by both Boards of Executive Directors which provided a basis for the Committee’s consideration of the matter and whose conclusions have been accepted by the Committee.

Sincerely yours,

/s/

Henri Konan Bédié

Chairman

Development Committee

Attachments

The Honorable

Mohammed Imady

Chairman of the Board of Governors

International Monetary Fund

The Honorable

Sadek Ayoubi

Chairman of the Board of Governors

International Bank for Reconstruction and Development

Attachment: Report of the Executive Directors of the Bank and the Fund Concerning the Review of Performance of the Development Committee

July 23, 1976

1. Summary and recommendations

The parallel Resolutions of the Boards of Governors of the Fund and the Bank establishing the Joint Ministerial Committee of the two Boards on the Transfer of Real Resources to Developing Countries (Development Committee), which were adopted on October 2, 1974, provide no terminal date for the Committee but that “At the end of two years from the effective date of this Resolution, the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate.” 4 In accordance with the discussion during the January 1976 meeting of the Development Committee, the Executive Directors of the Fund and the Bank are submitting this report. The preparation of this report has been undertaken in collaboration with the Acting Executive Secretary of the Committee, who agrees with this report and its recommendations.

The Executive Directors of the Bank and the Fund have discussed the work program and the procedures of the Development Committee. While noting a number of problems during the first two years, the Executive Directors reaffirm the view that the Committee should be a useful forum for the discussion of issues relating to the transfer of real resources. The Executive Directors recommend that the Committee continue to be a Joint Committee of the Boards of Governors of the Bank and the Fund with no change in its mandate. Because the period of operations has been brief and affected by special events, the Executive Directors recommend that the Boards of Governors should further review the performance of the Committee at the end of four years from the effective date of the parallel Resolutions, i.e., October 2, 1978. A draft Resolution to implement this recommendation is proposed.5 In addition, several operational improvements are suggested.

2. Background

The Committee of Twenty, on the culmination of its work in June 1974, recommended in the Outline of Reform that two committees be set up: an Interim Committee in the Fund to deal with monetary reform and a Joint Ministerial Committee of the Bank and the Fund (Development Committee) to continue the study of the broad question of the transfer of real resources to developing countries and to make suggestions to implement its conclusions. The Development Committee was established by parallel resolutions adopted by the Boards of Governors of the Bank and the Fund on October 2, 1974. The Committee was asked to maintain an overview of the development process, to advise the Boards of Governors of the Bank and the Fund on all aspects of the transfer of real resources, to make suggestions to those concerned regarding implementation of its conclusions and to review the implementation of its suggestions. The Committee was requested to establish a detailed program of work. As a matter of urgency, the Committee was asked to consider the specific problems of the least developed countries and those developing countries most seriously affected by the current balance of payments difficulties.

The Development Committee was conceived as a forum for discussion of issues relating to the transfer of real resources at a high political level between all members of the Bank and the Fund. The intention was that the Committee should not duplicate or supplant existing organizations, but would complement them, and where feasible would suggest courses of action to the relevant agencies. The objective, as noted in the preamble of the Resolution, was to help provide

. . . a focal point in the structure of international economic cooperation for formation of a comprehensive overview of diverse international activities in the development area, for efficient and prompt consideration of development issues, and for coordination of international efforts to deal with problems of financing development . . .

A small Secretariat was established to support the Committee, especially in its work falling outside the operational and administrative framework of the Bank and the Fund, and drawing on the technical staff of the Bank and the Fund to the maximum extent feasible. Appropriate arrangements were to be made for the coordination of the Committee’s work and the work of the Executive Directors of the Bank and the Fund.

The Committee’s work began with its first substantive meeting in January 1975 and, including its inaugural meeting, it has met five times. The Committee’s work program, which was agreed to in January 1975, was divided into two broad areas, the short-term issues which arose in connection with the dramatic changes in the world economy during 1973 and 1974, and the more fundamental long-term issues of development.

3. The work of the Development Committee

The Committee’s concern with the immediate economic problems facing the developing countries led it to support strongly the proposal to establish for one year a new intermediate lending facility of the Bank (Third Window) which was under active consideration in the Executive Board of the Bank. The Committee supported the establishment of an IMF Trust Fund to provide additional resources, on a concessional basis, to meet the balance of payments needs of low income developing countries for the next few years which was under active consideration in the Executive Board of the Fund. Some of the issues, e.g., the liberalization of the compensatory financing facility, under discussion in the Interim Committee, also received indirect support from the concurrent discussions in the Development Committee.

A perspective for discussions of the longer-term issues was provided by the World Bank studies of the capital requirements and prospects of the developing countries to 1980, and the IMF’s periodic review of the current situation and outlook. These were supplemented by Committee documents providing an overview of the availability of resources from international lending institutions, official bilateral development assistance and private capital markets. A special working group consisting of representatives of member governments was established to consider specific solutions to improve the access of developing countries to private capital markets and the group is now actively engaged in that task.

In the meeting in January 1976, several members expressed a particular interest in pursuing the review of development aid flows from bilateral and multilateral sources, including the questions of resource mobilization for international lending institutions. A substantive discussion of the issues involved in these areas has not yet been possible in the Committee and further staff work is under way on this subject as well as in the area of improving access by developing countries to private capital markets.

As requested in the parallel Resolutions, the focus of the Committee’s work at the outset was on measures which might assist the developing countries to deal with the impact of the international economic events of 1974 and 1975. It was not until June 1975 that proposals for a longer-term work program were discussed and since then the Committee has only had one meeting, aside from the session during the 1975 Annual Meeting. Thus, while work is proceeding on a number of issues in the Working Group on Capital Market Access, and papers are in preparation on such topics as the lending programs of the international and regional financial institutions, this work had not reached the stage where it was ready to be put before the Committee for discussion. Because the time has been too short for the Committee to deal with the longer-term issues relating to the transfer of real resources, it would be premature to assess the work of the Committee in terms of the full range of its objectives.

The discussions of the work of the Committee to date make it clear that the basic objective of the Committee as a high-level political forum for the discussion of issues relating to the transfer of real resources to the developing countries remains of great importance and that the mandate of the Committee requires no adjustment at this time. While the work program for the next year has not yet been fully worked out, there is broad agreement that the work on access to capital markets and on the flow of aid from bilateral and multilateral sources should be continued and there is the expectation that this work program might be augmented by consideration of some of the issues arising from discussion in the United Nations Conference on Trade and Development and the Conference on International Economic Cooperation.

The Executive Directors have discussed various ways in which the effectiveness of operations could be improved. There was a consensus that the agenda should be more sharply focused and that meetings should be held only when issues are ready for active consideration at a high political level.

The preparation of issues for Ministerial discussion could be improved by relying more on the Executive Directors of the Bank and the Fund for a preliminary exploration of issues. The Executive Directors favor the improvement of procedures by which they will have an adequate opportunity to review and make suggestions on papers, including the draft agenda. These objectives will be achieved by means of improved arrangements for cooperation which are being worked out with the Secretariat. At all stages there will continue to be close liaison between the staffs of the Bank and the Fund, but each working separately in relation to its Board.

The Chairman, assisted by the Secretariat, might help in the future to channel discussions more sharply to priority issues. When issues for political resolution have been identified, the Chairman could undertake high-level consultations in advance of meetings in order to define the issues for discussion and to assist in reaching agreement or in narrowing differences. To enable the Secretariat members to devote more time to duties of this kind, it would be possible for them to draw more extensively on Bank/Fund staff assistance for the preparation of the necessary papers.

Annex II to Report I

July 23, 1976

Dear Mr. Chairman:

The parallel Resolutions of the Boards of Governors of the Fund and the Bank establishing 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), which were adopted on October 2, 1974, provided that “At the end of two years from the effective date of this Resolution, the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate.” Pursuant to the request made by the Development Committee at its meeting in January 1976, the Executive Directors of the Bank and the Fund have prepared a report concerning the review of the Committee’s performance and this report was sent to the Development Committee on July 23, 1976.

The report recommends that the Board of Governors should review the performance of the Committee at the end of four years from the effective date of the parallel Resolutions, i.e., October 2, 1978. In accordance with this recommendation, I am transmitting herewith a proposed Resolution 6 that has been prepared by the Executive Directors.

Very truly yours,

/s/

H. Johannes Witteveen

Managing Director

and

Chairman of the Executive Board

Chairman of the Board of Governors

1976 Annual Meeting

International Monetary Fund

Report II1

October 7, 1976

Mr. Chairman:

At the meeting of the Joint Procedures Committee held on October 7, 1976, 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. 1976 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 (the 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. 1976 Regular Election of Executive Directors

The Committee noted that the 1976 Regular Election of the Executive Directors of the Fund [Annex II] had taken place and that the next Regular Election of the Executive Directors will take place at the Annual Meeting of the Board of Governors in 1978.

5. Financial Statements, Report on Audit, and Administrative Budget

The Committee considered the Report on Audit for the fiscal year ended April 30, 1976, the Financial Statements contained therein (Fund Document No. 8 and Appendix VIII of the 1976 Annual Report), and the Administrative Budget for the fiscal year ending April 30, 1977 (Fund Document No. 10 and Appendix VI of the 1976 Annual Report).

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 9.3

6. 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 October 4, 1976, regarding amendment of the Rules and Regulations, reproduced as Fund Document No. 11 [Annex III].

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Attachment 2 of Fund Document No. 11.4

7. Application for Membership

(a) Guinea-Bissau. The Committee has considered the recommendation of the Executive Directors regarding the admission of Guinea-Bissau to membership in the Fund, set forth in Fund Document No. 12 [Annex IV].

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 12.5

(b) Surinam. The Committee has considered the recommendation of the Executive Directors regarding the admission of Surinam to membership in the Fund set forth in Fund Document No. 13 [Annex V].

The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 13.6

8. 1976 Regular Election—Ballots of Governors for Bahrain and Oman

The Committee noted that the Governors for Bahrain and Oman had been unable to cast ballots in the 1976 Regular Election of Executive Directors for reasons beyond their control.

The Committee recommends the adoption of the following draft Resolution:

Resolved: That the Governors for Bahrain and Oman be permitted to cast their ballots in the 1976 Regular Election of Executive Directors and have their votes counted toward the election of an Executive Director by depositing their ballots with the Secretary of the Fund before the end of the 1976 Annual Meeting.7

Approved:

/s/ Mohammed Imady/s/ A. Szasz
Syrian Arab Republic—ChairmanNetherlands—Reporting Member

Annex I to Report II

October 3, 1976

Gentlemen:

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 1975–June 1976. 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/

Henri Konan Bédié

Chairman

Development Committee

Attachment

The Honorable

Mohammed Imady

Chairman of the Board of Governors

International Monetary Fund

The Honorable

Sadek Ayoubi

Chairman of the Board of Governors

International Bank for Reconstruction and Development

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 1975–June 1976)

I. Introduction

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) was established in October 1974. Its 1975 Annual Report to the Boards of Governors of the Bank and the Fund covered the period from October 1974 through June 1975. This second report covers activities from July 1975 through June 1976.

During the year under review, the Committee continued to serve as a forum for discussion of financial aspects of the broad questions of development and transfer of resources. While not constituted as a decision-making body, the Committee sought to promote a high-level international consensus as a means of facilitating decisions on development issues in appropriate bodies. A number of proposals given support by the Committee were translated into action by the relevant bodies during the year, and consideration of other possibilities was under way. As a contribution toward improved coordination of international programs of development, the Committee disseminated to its members analytic documentation regarding such programs, and continued to maintain close relationships with a number of international institutions and entities concerned with development, many of which participate as observers in the Committee’s meetings.

The Development Committee met twice during the year: first in Washington in September 1975, at the time of the Annual Meetings of the Boards of Governors of the Bank and the Fund, and second in Kingston, Jamaica, in January 1976. The Washington meeting was the occasion for extensive discussion of the work program for the year ahead, and for an expression of Committee support for establishment of an IMF Trust Fund. The Committee also urged that sufficient funding be made available to the newly established Third Window of the Bank. At its Jamaica meeting, the Committee examined aspects of the use of Trust Fund resources and of work being done on the access of developing countries to international capital markets. The Committee also strongly endorsed the need for adequate increases in the capitalization of major international and regional lending institutions, including particularly IDA. In addition to these activities at Committee level, a Working Group on Access to Capital Markets began work in August 1975 and met four times during this year.

The Committee focused in the initial period on the immediate problems confronting the poorest and the most seriously affected developing countries. At the same time, a basis was laid for giving attention to the longer-term and more fundamental problems of developing countries at all stages of development. The transition to principal concern with the latter problems was well under way by the end of the period under review. It is expected that the bulk of the Committee’s attention in the period ahead will be directed toward structural problems extending to the end of the decade and beyond, e.g., official and private financing in development, the long-term role of international financial institutions, long-term balance of payments stabilization of developing countries, efforts to assist the developing countries in the area of world trade, and the impact of an evolving international monetary system on the development process.

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

The subjects considered by the Committee during 1975–76 fall into the following major areas: the general situation and external resource requirements of developing countries, official development assistance, private capital flows, the operations of multilateral lending agencies, and balance of payments assistance.

1. Situation and prospects of developing countries and their external resource requirements

Analysis prepared by the Fund in December 1975 and presented to the Committee at its Jamaica meeting showed that less developed non-oil primary producing countries were expected to incur current account deficits aggregating about $35 billion in the year 1975, compared with about $27 billion in the preceding year, and would have a deficit of about $31 billion in 1976. The Committee noted with concern that 1976 would be the third successive year in which the non-oil developing countries were likely to incur such extraordinarily large current account deficits, which had had to be financed by an unprecedented recourse to borrowings, often at relatively hard terms, and substantial use of reserves.

Taking into account these developments, the World Bank analyzed for the Committee the likely growth performance of the non-oil developing countries to the end of the decade and the associated requirements for external capital. Their assessment suggested that the UN target of annual growth of 6 per cent would probably not be attainable, and that average growth to the end of the decade by lower-income developing countries was not likely to exceed 5.0 per cent, while that of the middle income countries was not likely to exceed 5.5 per cent. It was estimated that an additional $12.3 billion of official capital (above the projected average annual availability from public and private sources of $49.4 billion) would be required annually to 1980 to realize even these projections, including a substantial and critically important proportion on concessional terms.

The Committee expressed grave concern that the 6 per cent growth target for the Second Development Decade was unlikely to be achieved by the non-oil developing countries, and concluded that substantial amounts of additional external capital would be required if the shortfall from that target is to be held to modest proportions.

2. Official Development Assistance

At its meeting in September 1975, the Development Committee decided to include among those issues requiring its special attention “means of improving the current situation affecting resource transfers . . . including quantitative aid targets and their implementation.” To this end, the Committee received for the Jamaica meeting in January 1976 Secretariat documentation dealing with recent trends in the flow of official development assistance, with aid targets and a possible phased movement toward their realization, and with the relationship between existing underutilization of productive resources in aid-giving countries and the aid efforts of such countries.

Aggregate net disbursement of concessional resources in 1974 amounted to $14.9 billion, of which $11.3 billion came from DAC countries, $2.4 billion from OPEC countries, and the balance of $1.2 billion from the centrally planned economies. Slightly over a quarter of the 1974 flow was made available through multilateral channels. DAC assistance remained virtually unchanged in constant dollar terms over the ten years ending in 1974; as a percentage of GNP, it declined from 0.53 per cent in 1961 to 0.33 per cent in 1974. (Preliminary figures recently available indicate that this percentage rose to 0.35 per cent in 1975.) DAC aid on the average had a grant element above 84 per cent in 1974. For OPEC countries, 1974 flows represented 1.4 per cent of GNP, and were estimated to involve a grant element of about 65 per cent.

Currently, the most widely accepted—although by no means universally endorsed—goal for aid-giving by donor countries is the UN target of 0.7 per cent of GNP in the form of ODA by the end of the decade. Considerable emphasis was given to the importance of reaching the 0.7 per cent target at the Seventh Special Session of the UN in September 1975 and more recently at the UNCTAD session in Nairobi, although a number of countries continue to maintain their reservations as to acceptance of the target itself and others as to the date by which they might reach the target.

Against this background, the Committee initiated discussion at the Jamaica meeting of ways to improve the performance of the aid-giving community with respect to the flow of official development assistance, including the possibility that, in the anticipated circumstances of recovery in industrial countries, aid givers might agree to set aside a small fraction of the increment in their GNP as additional development assistance. There was also discussion of the concept that idle productive capacity in industrial countries, reflecting recessionary conditions, might be put to work producing developmental goods for export to developing countries under special financing arrangement. Although there was no agreement on the feasibility of the concept, the discussion gave useful emphasis to the broad underlying idea that production of aid goods for export has a stimulating effect on levels of overall production and employment in industrial countries.

3. Access to capital markets

The subject of improving access of developing countries to international capital markets continued to be of special interest to the Committee, and was pursued very actively during the year by a Working Group set up in August 1975. The Working Group consists of representatives of 12 members of the Committee, 7 representing capital market countries and 5 representing developing countries. It met four times during the year, including one meeting substantially devoted to a seminar with representatives of banks and other institutions active internationally in private capital markets.

An Interim Report of the Working Group to the January 1976 meeting of the Committee noted as primary areas of interest (a) restrictions and other obstacles to access to markets, (b) direct measures to support the creditworthiness of developing country borrowers in capital markets, including possible multilateral guarantees or active use of guarantee authority of international lending institutions, (c) the problem of secondary markets for developing country securities, (d) co-financing involving international lending institutions and private lenders, (e) a possible international investment trust, and (f) technical assistance to developing countries seeking market access and the correlative problem of educating potential investors regarding the situation and prospects of developing countries.

(a) Restrictions and other obstacles to access to markets

In regard to restrictions and practices constituting obstacles to capital market access, the Executive Secretariat, pursuant to guidance from the Working Group, and with the assistance of staff of the International Monetary Fund, was actively engaged at the end of the period of this report in consultations with authorities in selected countries aimed ultimately at either formulation of a general program of liberalization which could be adopted by common agreement of market countries, or agreements with specific market countries on liberalization actions appropriate to that country, or both approaches simultaneously. A selected group of developing countries that have had access to international capital markets was asked to identify specific obstacles to market access. On the basis of the information gathered from these countries, as well as a generalized questionnaire, capital market countries were being consulted regarding regulatory or other restrictions and, where such existed, the scope for liberalizing actions.

(b) Measures to support creditworthiness of developing country borrowers

In its consideration of direct actions to support the creditworthiness of developing countries, the Working Group examined a Secretariat outline of a possible new multilateral guarantee facility based on new contingent liability undertakings by participants among industrial and OPEC countries and a modest reserve fund. The facility was seen as providing, on a fee basis, partial or full guarantees for bonds floated in national or international markets primarily by those developing countries that were potentially creditworthy but had not yet developed substantial access to the bond market. Factors of concern to the Working Group in its examination included the problem of ensuring that the facility would elicit additional resources from capital markets rather than divert resources from established developing country borrowers; the question of costs in comparison with loans intermediated by the international lending institutions; means of confining guarantees to a transitional stage en route to fully independent market access by borrowers; and the possibility of avoiding the creation of new international organizations. Particularly in the light of the last consideration, there was support in the Working Group for pursuing the multilateral guarantees idea through activation of authority to make guarantees already vested in the international and regional development lending institutions. It was recognized that in such institutions direct loans and guarantees are supported by the same capital base so that special additions to capital resources for guarantees would have to be contemplated if direct lending capabilities are not to be reduced.

(c) Secondary markets for developing country securities

The Working Group’s exchanges with private market experts revealed that the absence of secondary markets of any depth for issues by developing countries was regarded as a significant obstacle to the successful primary marketing of such issues. The Executive Secretariat prepared an analysis of various courses of action that had been suggested, including the possible use of liquid funds of international lending institutions for secondary market purchases and sales of developing country securities; use of such funds for short to medium-term investments in such securities in order to strengthen both primary and secondary markets; and creation of a semi-public institution to function as a market-maker in the obligations of developing countries. These ideas were pending with the Working Group at the end of the reporting period.

(d) Co-financing

At its January 1976 meeting, the Committee took note of the progress being made in regard to co-financing arrangements involving international lending institutions on the one hand and private lenders on the other. The Committee urged that such arrangements be expanded. An examination covering experience to date and appraising the scope for further expansion is in progress.

(e) International investment trust

An international investment trust, whose function would be to offer an attractive investment opportunity to private investors and possibly to certain governments in a diversified portfolio of developing country debt and equity obligations, was suggested at the Seventh Special Session of the UN General Assembly, and analytical work on the idea was undertaken by the International Finance Corporation. It is anticipated that the IFC analysis will be considered by the Working Group later in calendar year 1976.

(f) Technical assistance

A Secretariat review of existing bilateral and multilateral technical assistance activities related to access to capital markets, together with preliminary suggestions for possible actions in this area, was being prepared for early consideration by the Working Group.

4. Operations of international lending institutions

From the outset, the Committee has attached great importance to the role played by the international lending institutions—the World Bank and the regional development banks—within the overall picture of official development assistance.

In response to the view expressed in the Committee that a survey of the international lending institutions and of initiatives in other bodies might help avoid duplication of functions and promote a coordinated approach to the problem of transfer of resources, the Executive Secretariat prepared and submitted to the Committee for its Jamaica meeting an initial paper covering major existing international lending institutions. A further paper, possibly covering some additional institutions and recent initiatives will be prepared for a subsequent meeting. The Secretariat paper emphasized the quantitative importance of multilateral lending. The core group of international lending institutions during 1974 lent $6.7 billion, compared to total bilateral loans and grants by DAC countries of $11.6 billion in that year, and total multilateral loan commitments during the period 1972–74 averaged $5.2 billion per annum. For the future, it appeared that loan commitments expressed in current dollars might rise from $8.4 billion in 1975 to $14.2 billion in 1980, in nominal terms, or in terms of constant 1974 dollars, from $5.9 billion in 1975 to $7.7 billion in 1980. A matter of concern was that concessional lending as a proportion of total loan commitments, which showed an irregular downward trend during 1972–74 and averaged 34 per cent for that period, would on the basis of the projections decline further to about 28 per cent of the total in 1980.

The Secretariat paper was not concerned with the criteria for the allocation of multilateral lending. Its analysis of the sectoral and geographic composition of such lending in 1975 showed that agriculture was being accorded first priority by the institutions as a group; that Latin America was the largest regional recipient; and that in terms of relative population of borrowing areas, South Asia’s share of multilateral lending was substantially lower than other regions. Finally, the Secretariat paper described the pending or anticipated capital resource replenishment proposals by the various institutions. In the light of the analysis presented, the Committee expressed its full support for an adequate increase in capital for the international lending institutions, and members of the Committee suggested areas to which the analysis should be broadened.

Regarding particular institutional developments, the Committee noted at its Jamaica meeting that the Third Window of the World Bank for loans on intermediate terms, establishment of which the Committee had called for at an earlier meeting, had become operational in December 1975 with resources permitting $600 million of loans, mainly for countries with per capita income below $375. The Committee urged those countries that had not already contributed to help increase the Third Window’s resources. The Committee also requested the Executive Directors of the World Bank to place a proposal for an increase in the Bank’s capital before the Governors at an early date. Committee support was given for an early increase in the capital of the International Finance Corporation as well. Taking note of the particularly urgent need for assistance to low-income countries, the Committee called for a substantially enlarged Fifth Replenishment of the International Development Association. Many members felt that the enlargement should result in an increase in real terms over the previous replenishment. As far as the resources of the regional banks were concerned, the Committee urged that timely replenishment action be taken, including action to provide for their concessionary funds.

5. Balance of payments assistance

The acute balance of payments problems of developing countries arising from recent unprecedented world economic events and particularly the balance of payments problems of the most seriously affected developing countries, necessarily commanded close attention of the Committee from the outset. The two areas of Development Committee interest as far as short-term balance of payments assistance was concerned were an IMF-administered Trust Fund and expansion of the IMF compensatory financing facility, although it was recognized that the main responsibility for carrying forward both of these topics lay with the Interim Committee and the Executive Directors of the IMF.

By the time of the Committee’s meeting in September 1975, the Interim Committee had reached agreement that one-sixth of the Fund’s gold should be disposed of and the net proceeds applied for the benefit of developing countries, but it had not yet reached agreement that the Trust Fund should be established and receive the gold disposal proceeds. At that juncture, the Development Committee, after being informed of the status of the Fund Executive Directors’ consideration of the questions associated with the Trust Fund, supported the principle that such a Fund should be established for balance of payments help primarily to lower income countries, using profits from Fund gold sales but without neglecting consideration of other possible sources of financing. In the final phase of consideration at Jamaica, the Interim Committee, after agreeing that the Trust Fund should be established without delay, asked the Development Committee to consider further certain aspects of use of Trust Fund resources. The Development Committee accordingly discussed the matter and indicated various considerations to be taken into account by the Executive Directors of the Fund in completing their work on establishment of the Trust Fund. Formal announcement that the Executive Directors of the Fund had established the Trust Fund and had fixed the date for the first auction of gold to generate profits for the Trust Fund’s financing was made by the Managing Director of the Fund in early May.

Discussion in the Committee of the need for liberalization of compensatory financing facilities was largely held in the context of consideration of commodity problems in general. Following the announcement by the Fund’s Executive Directors at the end of 1975 of liberalized Fund compensatory financing rules, a number of Committee members called for an early review of the adequacy in practice of the new measures. Accordingly, the Committee agreed to keep the subject of stabilization of export earnings among those topics to which, it would give priority attention, along with several other trade and commodity matters.

III. Review of the Committee

In order to facilitate the review of the performance of the Committee by the Boards of Governors of the Bank and Fund called for at the end of two years by the Resolutions by which the Committee was established, the Committee decided in January 1976 to review its initial period of operations at its meeting scheduled immediately prior to the Bank and Fund Annual Meetings at Manila in October 1976, and to present its conclusions to the Boards of Governors. At its Jamaica Meeting, the Committee asked that, as a basis for its review, a report be prepared by the Boards of Executive Directors of the Bank and Fund, together with the Executive Secretary. At the close of the period of this Annual Report, there was under preparation a report and draft resolution recommending that the Boards of Governors should review the performance of the Committee at the end of four years from the effective date of the parallel Resolutions, i.e., October 2, 1978.

* * * * *

The past year has been one of intense consideration in various forums of the problems of development and the transfer of real resources to the developing countries. Apart from the work already in hand, the Development Committee will, at its Manila meeting, consider further areas of activity, taking into account the emergent trends in the world economy and the results of recent interchanges among the industrial countries, the oil economies, and the developing world, notably the Fourth UNCTAD and the North-South dialogue.

Annexes

  • Members of the Committee

  • Organizational and Administrative Aspects

  • Text of Parallel IBRD and IMF Resolutions

    Establishing the Development Committee

    (see Summary Proceedings, 1975, pages 278–82).

  • Agendas and Press Communiqués of Meetings held during 1975–76.

Annex A: Members of the Committee

As of June 30, 1976, the membership of the Committee was as follows, according to notifications received by the Executive Secretariat:

MemberCountries
1.Mr. Abdlatif Y. Al-Hamad

Director General

Kuwait Fund for Arab Economic Development

Kuwait
Bahrain, Egypt (Arab Republic of), Iraq, Jordan, Kuwait, Lebanon, Pakistan, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates, Yemen Arab Republic
2.His Excellency

Dr. Hans Apel

Federal Minister of Finance

Germany
Germany
3.His Excellency

Jorge Cauas

Minister of Finance

Chile
Argentina, Bolivia, Chile, Paraguay, Uruguay
4.The Honorable

Emilio Colombo

Minister of the Treasury

Italy
Italy, Portugal, Spain
5.His Excellency

Willy De Clercq

Minister of Finance

Belgium
Austria, Belgium, Luxembourg, Turkey
6.His Excellency

Dr. W. F. Duisenberg

Minister of Finance

The Netherlands
Cyprus, Israel, Netherlands, Romania, Yugoslavia
7.His Excellency

Kjell-Olof Feldt

Minister for International Economic Affairs

Sweden
Denmark, Finland, Iceland, Norway, Sweden
8.His Excellency

Jean-Pierre Fourcade

Ministry of Economy and Finance

France
France
9.Rt. Hon. Denis W. Healey, M.B.E., M.P.

Chancellor of the Exchequer

United Kingdom
United Kingdom
10.The Honorable

Yong Hwan Kim

Minister of Finance

Korea
Burma, Cambodia, Fiji, Indonesia, Korea, Lao People’s Democratic Republic, Malaysia, Nepal, Singapore, Thailand, South Viet-Nam
11.His Excellency

Henri Konan Bédié8

Minister of Economy and Finance

Ivory Coast
Benin (People’s Republic of), Cameroon, Central African Republic, Chad, Congo (People’s Republic of), Gabon, Ivory Coast, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Senegal, Somalia, Togo, Upper Volta, Zaïre
12.The Honorable

P. R. Lynch, M.P.

Treasurer

Australia
Australia, New Zealand, Western Samoa
13.The Honorable

Donald S. Macdonald

Minister of Finance

Canada
Bahamas, Barbados, Canada, Guyana, Ireland, Jamaica
14.His Excellency

Masayoshi Ohira

Minister of Finance

Japan
Japan
15.His Excellency

Manuel Pérez Guerrero

Minister for International Financial Affairs

Venezuela
Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Peru, Venezuela
16.The Honorable

F. C. Prevatt

Minister of Finance

Trinidad and Tobago
Botswana, Burundi, Equatorial Guinea, Ethiopia, The Gambia, Guinea, Kenya, Lesotho, Liberia, Malawi, Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania, Trinidad and Tobago, Uganda, Zambia
17.The Honorable

William E. Simon

Secretary of the Treasury

United States
United States
18.The Honorable

C. Subramaniam

Minister of Finance

India
Bangladesh, India, Sri Lanka
19.The Honorable

Cesar E. A. Virata

Secretary of Finance

Philippines
Brazil, Colombia, Dominican Republic, Ecuador, Philippines
20.His Excellency

Mustapha Zaanouni

Minister of Planning

Tunisia
Afghanistan, Algeria, Ghana, Greece, Iran, Libyan Arab Republic, 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. Mr. Costanzo resigned effective April 15, 1976, and on that date Mr. M. M. Ahmad, Deputy Executive Secretary, assumed duties as Acting Executive Secretary.

Secretariat: As of June 30, 1976, the Executive Secretariat consisted of two Deputy Executive Secretaries (one of whom was serving as Acting Executive Secretary) and two Assistant Executive Secretaries.

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. The twelve-member Working Group consists of representatives of the constituencies headed by Canada, France, Germany, Japan, Korea, Kuwait, Netherlands, Philippines, Trinidad and Tobago, United Kingdom, United States and Venezuela. Representatives of various international bodies concerned with private capital flows to developing countries participate as observers. The Working Group met four times during the year, providing a vehicle for ongoing technical examination of a major area of interest to the Committee.

Relations with other organizations: The organizations listed below were represented by observers at meetings of the Committee during 1975–76. 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

  • 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 and the United Nations Conference on Trade and Development, 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 1975–76

Meeting of September 3–4, 1975

  • Agenda (administrative items omitted)

    • Special Trust Fund

    • Third Window: Status Report

    • Working Group on Access to Capital Markets: Status Report

    • Future Work Program

  • Press Communiqué (text published in Summary Proceedings, 1975, pages 305–307).

Meeting of January 9, 1976

  • Agenda (administrative items omitted)

    1. Current Situation and Prospects of Developing Countries

    2. Status Reports:

      • Trust Fund

      • Third Window

    3. Current Commodity Issues

    4. Interim Report of Working Group on Access to Capital Markets

    5. Means of Improving the Current Situation Affecting Resource Transfers: Aid Targets and Their Implementation

    6. Survey of Programs and Capital Resource Situations of International Development Lending Institutions

    7. Current Under-Utilization of Productive Capacity in Industrial Countries in Relation to Their Aid Effort.

B. Press Communiqué

1. The Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (the Development Committee) held its fifth meeting in Kingston, Jamaica, on January 9, 1976, under the chairmanship of Mr. Henri Konan Bédié, Minister of Economy and Finance for the Ivory Coast. Mr. Robert S. McNamara, President of the World Bank, Mr. H. Johannes Witteveen, Managing Director of the International Monetary Fund, and Mr. Henry J. Costanzo, Executive Secretary, took part in the meeting, which was also attended by representatives from a number of international and regional organizations and Switzerland as observers.

2. The Committee reviewed the current situation and prospects of the developing countries and noted with concern that the non-oil developing countries in 1976 are likely to incur extraordinarily large current account deficits for the third successive year. The Committee also noted with grave concern that the minimum 6 per cent growth target of the Second Development Decade appears not likely to be met for the non-oil developing countries and that substantial amounts of additional external capital are still required if the shortfall from this target is to be held to modest proportions. The Committee also discussed the means of improving the current situation affecting resource transfers, aid targets and their implementation, current under-utilization of productive capacity in industrial countries in relation to their aid effort, and the status of current commodity issues. It was against this background that the Committee considered various measures to increase the flow of resources to the developing countries.

3. The Committee noted the decision of the Interim Committee to establish the Trust Fund to provide balance of payments assistance to low-income countries as well as understandings reached regarding increased access to IMF resources. The Committee discussed the use of Trust Fund resources and indicated various considerations to be taken into account by the Executive Directors of the IMF in completing their work on establishment of the Trust Fund. The Committee noted that the Third Window for loans on intermediate terms by the World Bank had become operational, that contributions received and expected would permit Third Window loans of $600 million and urged those countries which have not already contributed to help to increase its resources.

4. The Committee received an interim progress report from its Working Group on Access to Capital Markets, discussed the proposed work program on the review of regulatory and other constraints on access to capital markets by developing countries, and recommended the completion of studies on other appropriate mechanisms which might improve access to capital markets, including the possible use of multilateral guarantees, the strengthening of secondary markets, and the possible creation of an international investment fund.

5. The Committee noted the progress being made in regard to co-financing arrangements by international and regional development banks and urged that these arrangements be expanded.

6. The Committee was presented with an initial survey of programs and capital resource situations of major international and regional lending institutions. The Committee expressed its full support for an adequate increase in capital financing of these institutions. In this context, the Committee requested the World Bank’s Executive Directors to place before the Board of Governors at an early date a proposal for an increase in the Bank’s capital. The Committee also supported an early increase in the capital of the International Finance Corporation. The Committee noted the particularly urgent need for assistance to low-income countries, and in this connection expressed its strong support of a substantially enlarged Fifth Replenishment of the International Development Association, which, in the opinion of many members, should be in real terms. The Committee noted that negotiations were under way to secure agreement in time to permit continuity of operations. The Committee urged timely action to replenish the resources of regional banks, including their soft-loan windows.

7. The Committee gave special attention to the question of commodity price fluctuations and to their consequences on the export earnings of developing countries. The Committee agreed to give priority attention to these questions, including especially possible measures for the financing of buffer stocks, for the stabilization of export earnings, and other efforts to assist the developing countries in the area of trade.

8. The Committee expressed its unanimous appreciation of the excellent arrangements made for the meeting and the hospitality extended by the Government of Jamaica.

Annex II to Report II: Rules for the Conduct of the 1976 Regular Election of Executive Directors of the Fund

  • Definitions: In these Rules, unless the context shall otherwise require:

    • (a) “Articles” means the Articles of Agreement of the Fund.

    • (b) “Board” means the Board of Governors of the Fund.

    • (c) “Chairman” means the Chairman of the Board or a Vice Chairman acting as Chairman.

    • (d) “Governor” includes the Alternate Governor or any temporary Alternate Governor when acting for the Governor.

    • (e) “Secretary” means the Secretary or any acting Secretary of the Fund.

    • (f) “Election” means the 1976 Regular Election of Executive Directors.

  • Date of Election: The election shall be held during the 1976 Annual Meeting at a time to be fixed by the Board.

  • Basic Rules—Schedule C: Subject to the adjustments set forth herein, the provisions of Schedule C of the Articles shall apply to the conduct of the election.

  • Executive Directors to Be Elected Under Article XII, Section 3(b)(iii):

    • (a) Twelve Executive Directors shall be elected under Article XII, Section 3(b) (iii).

    • (b) In view of the number of Executive Directors to be elected under Article XII, Section 3(b)(iii):

      • (i) 5½ per cent shall be substituted for “nineteen per cent” in paragraphs 2 and 5 of Schedule C.

      • (ii) 13 per cent shall be substituted for “twenty per cent” in paragraph 3, 4, and 5 of Schedule C.

      • (iii) “Twelve directors” shall be substituted for “five directors” and “twelve persons” shall be substituted for “five persons” in paragraph 2 of Schedule C.

  • Executive Directors to Be Elected Under Article XII, Section 3(b)(iv):

    Three Executive Directors shall be elected under Article XII, Section 3(b) (iv), and

    • (a) The minimum percentage of the eligible votes required for election under this subparagraph shall be 28 per cent.

    • (b) The maximum percentage of eligible votes for any one nominee for the purposes of paragraph 13 below shall be 38 per cent.

  • Nominations:

    • (a) Any person nominated by one or more Governors entitled to vote in the election shall be eligible for election as Executive Director.

    • (b) Each nomination shall be made on a Nomination Form furnished by the Secretary, signed by the Governor or Governors making the nomination and deposited with the Secretary.

    • (c) A Governor may nominate only one person.

    • (d) Nominations may be made until 12 o’clock noon on the day before the day on which the election is scheduled to be held. The Secretary shall post and distribute a list of the persons nominated.

  • Supervision of the Election: The Chairman shall appoint such tellers and other assistants and take such other action as he deems necessary for the conduct of the election.

  • Ballots: One ballot form shall be furnished, before a ballot is taken, to each Governor entitled to vote. On any particular ballot only ballot forms distributed for that ballot shall be counted.

  • Balloting—Order: The first ballot shall be simultaneous balloting of all the Governors entitled to participate in the election of Executive Directors under Article XII, Section 3(b)(iii), and all of the American Republics entitled to participate in the election of Executive Directors under Article XII, Section 3(b) (iv). The balloting for the Executive Directors elected under Article XII, Section 3(b)(iii), shall then be concluded before any further ballots are taken for the Executive Directors to be elected by the American Republics.

  • Balloting—General: Each ballot shall be taken as follows:

    • (a) There shall be a call of members whose Governors are entitled to vote and each ballot, signed by the Governor, shall be deposited in the ballot box.

    • (b) When a ballot shall have been completed, the Chairman shall cause the ballots to be counted and shall announce the names of the persons elected before the end of the session at which the election is held. If a succeeding ballot is necessary, the Chairman shall announce the names of the nominees to be voted on and the members whose Governors are entitled to vote.

    • (c) If the tellers shall be of the opinion that any particular ballot form is not properly executed, they shall, if possible, afford the Governor concerned an opportunity to correct it before tallying the results; and such ballot form, if so corrected, shall be deemed valid.

  • Balloting and Election of Executive Directors Under Article XII, Section 3(b)(iii):

    • (a) When on any ballot the number of nominees shall not exceed the number of Executive Directors to be elected, each nominee shall be deemed to be elected by the number of votes received by him on such ballot; provided, however, that if on such ballot the votes of any Governor shall be deemed under paragraph 4 of Schedule C to have raised the votes cast for any nominee above 13 per cent of the eligible votes, no nominee shall be deemed to have been elected who shall not have received on such ballot a minimum of 5½ per cent of the eligible votes and a succeeding ballot shall be taken for which any nominee not elected shall be eligible.

    • (b) If, as a result of the first ballot, the number of Executive Directors to be elected in accordance with paragraph 4 above shall not have been elected, a second and, if necessary, further ballots shall be taken. The Governors entitled to vote on such succeeding ballots shall be only (i) those Governors who voted on the preceding ballot for any nominee not elected, and (ii) those Governors whose votes for a nominee elected on the preceding ballot are deemed under paragraph 4 of Schedule C to have raised the votes cast for such nominee above 13 per cent of the eligible votes.

    • (c) The votes of a Governor shall not be deemed under paragraph 4 of Schedule C to have raised the total votes for a nominee above 13 per cent of the eligible votes if without the votes of such Governors such total would be more than 5½ per cent but not more than 13 per cent of the eligible votes.

    • (d) If on any ballot two or more Governors having an equal number of votes shall have voted for the same nominee and the votes of one or more, but not all, of such Governors could be deemed under paragraph 4 of Schedule C to have raised the total votes received by such nominee above 13 per cent of the eligible votes, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot.

    • (e) If a Governor shall abstain from voting on any ballot taken under Article XII, Section 3 (b) (iii), he shall not be entitled to vote on any subsequent ballot and his votes shall not be counted within the meaning of Article XII, Section 3(i), toward the election of any Executive Director. If at the time of any ballot a member shall not have a duly appointed Governor, such member shall be deemed to have abstained from voting on that ballot.

  • Votes Cast for Nominee Not Elected Under Article XII, Section 3(b)(iii):

    Any member whose Governor has voted on the last ballot for a nominee not elected under Article XII, Section 3(b) (iii) may, before the effective date of the election, designate an Executive Director, who was elected under that provision, and he shall be deemed after the effective date of the election to have received that member’s votes in the election.

  • Election of Executive Directors Under Article XII, Section 3(b)(iv):

    These Rules supplement paragraph 7 of Schedule C.

    • (a) Each Governor eligible to participate in the election shall cast for one person all the votes to which he is entitled.

    • (b) The three nominees receiving the greatest number of votes shall be elected, provided that no nominee shall be elected who receives less than 28 per cent of the eligible votes. The person elected with the least number of votes cast for the three elected nominees shall be deemed to have been elected by all the votes cast for him, all the votes not cast in the ballot through abstention from voting and all those cast for such nominee or nominees as were not elected.

    • (c) When on any ballot two or more Executive Directors remain to be elected and there are the same number of nominees, each nominee shall be elected by the number of votes received by him; provided, that if the votes of any Governor shall be deemed to have raised the votes cast for any nominee above 38 per cent of the eligible votes, no nominee shall be elected on that ballot who shall not have received 28 per cent of the eligible votes and a succeeding ballot shall be taken for which any nominee not elected on the preceding ballot shall be eligible.

  • Succeeding Ballots for Election of Executive Directors Under Article XII, Section 3(b)(iv):

    • (a) If, as a result of the first ballot, the number of Executive Directors to be elected in accordance with paragraph 5 above shall not have been elected, a second and, if necessary, further ballots shall be taken. The Governors entitled to vote on such succeeding ballots shall be only (i) those Governors who voted on the preceding ballot for any nominee not elected or who abstained from voting on the preceding ballot and (ii) those Governors whose votes for a nominee elected on the preceding ballot are deemed to have raised the votes cast for such nominee above 38 per cent of the eligible votes. In determining whether the votes cast by a Governor are to be deemed to have raised the total of any nominee above 38 per cent of the eligible votes, the 38 per cent shall be deemed to include, first, the votes of the Governor casting the largest number of votes for such nominee, then the votes of the Governor casting the next largest number of votes and so on until 38 per cent is reached.

    • (b) The votes of a Governor under subparagraph (a) above shall not be deemed to have raised the total votes for a nominee above 38 per cent of the eligible votes if without the votes of such Governor such total would be more than 28 per cent but not more than 38 per cent of the eligible votes.

    • (c) If on any ballot two or more Governors having an equal number of votes shall have voted for the same nominee and the votes of one or more, but not all, of such Governors could be deemed under subparagraph (a) above to have raised the total votes received by such nominee above 38 per cent of the eligible votes the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot.

  • Elimination of Nominees: If on any ballot two or more nominees shall receive the lowest number of votes, no nominee shall be dropped from the next succeeding ballot, but if the same situation is repeated on such succeeding ballot, the Chairman shall eliminate by lot one of the nominees from the following ballot.

  • Announcement of Result: After the last ballot the Chairman shall cause to be distributed a statement setting forth the result of the election.

  • Effective Date of Election of Executive Directors: The effective date of election shall be November 1, 1976. Incumbent elected Executive Directors shall serve through the day preceding such date.

  • General: Any questions arising in connection with the conduct of the election shall be resolved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Board. Whenever possible, any such question shall be put without identifying the members or Governors concerned.

As approved by Board of Governors

Resolution No. 31-8, September 7, 1976

Statement of Results of Elections, October 5, 1976 9

1. Candidates Elected Under Article XII, Section 3(b) (iii)

Candidate ElectedMembers Whose Votes Counted Toward Election 10Number of Votes
Muhammad Al-AtrashBahrain 9350
Egypt2,130
Iraq1,340
Jordan480
Kuwait900
Lebanon340
Libyan Arab Republic490
Pakistan2,600
Qatar450
Saudi Arabia1,590
Somalia440
Syrian Arab Republic750
United Arab Emirates400
Yemen Arab Republic350
12,610
Jahangir AmuzegarAfghanistan620
Algeria1,550
Ghana1,120
Greece1,630
Iran2,170
Morocco1,380
Oman 9320
Tunisia730
Yemen, People’s Dem. Rep. of540
10,060
Jacques de GrooteAustria2,950
Belgium6,750
Luxembourg450
Turkey1,760
11,910
Lamberto DiniItaly10,250
Malta410
Portugal1,420
Spain4,200
16,280
Bernard J. DrabbleBahamas450
Barbados380
Canada11,250
Grenada270
Ireland1,460
Jamaica780
14,590
Frede HollensenDenmark2,850
Finland2,150
Iceland480
Norway2,650
Sweden3,500
11,630
M. G. KaulBangladesh1,500
India9,650
Sri Lanka1,230
12,380
Byanti KharmawanBurma850
Fiji380
Indonesia2,850
Korea1,050
Lao People’s Dem. Rep.380
Malaysia2,110
Nepal374
Singapore620
Thailand1,590
Viet Nam870
11,074
Pieter LieftinckCyprus510
Israel1,550
Netherlands7,250
Romania2,150
Yugoslavia2,320
13,780
Wila D’Israeli Mung’ombaBotswana300
Burundi440
Ethiopia520
The Gambia320
Guinea490
Kenya730
Lesotho300
Liberia540
Malawi400
Nigeria1,600
Sierra Leone500
Sudan970
Swaziland330
Tanzania670
Uganda650
Zambia1,010
9,770
Samuel Nana-SinkamBenin380
Cameroon600
Central African Republic380
Chad380
Congo, People’s Rep. of the380
Equatorial Guinea330
Gabon400
Ivory Coast770
Madagascar510
Mali470
Mauritania380
Mauritius470
Niger380
Rwanda440
Senegal590
Togo400
Upper Volta380
Zaïre1,380
9,020
Robert J. WhitelawAustralia6,900
New Zealand2,270
Papua New Guinea450
Philippines1,800
Western Samoa270
11,690

2. Candidates Elected Under Article XII, Section 3(b) (iv)

Roberto GuarnieriCosta Rica570
El Salvador600
Guatemala610
Honduras500
Mexico3,950
Nicaragua520
Venezuela3,550
10,300
Alexandre KafkaBrazil4,650
Colombia1,820
Dominican Republic680
Guyana450
Haiti440
Panama610
Peru1,480
Trinidad and Tobago880
11,010
Dante SimoneArgentina4,650
Bolivia620
Chile1,830
Ecuador580
Paraguay440
Uruguay940
9,060
/s/ Ambroise Batienon/s/ Manmohan Singh
(Upper Volta)(India)
TellerTeller

Annex III to Report II

October 4, 1976

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.

The decisions of the Executive Board taken on June 13, 1974 with respect to the valuation of the SDR and the determination of the rate of remuneration and the rate of interest on the SDR provided for a review of those decisions two years from their adoption. Accordingly, the Executive Board completed on June 30, 1976 a review of those decisions, which are incorporated in Rules O-3, I-10, and Q-1 of the Rules and Regulations, as adopted on June 13, 1974 and amended on July 1, 1975. It was decided that no change would be made in the valuation method as set out in Rule O-3 but that the rate of remuneration on members’ creditor positions as set out in Rule I-10 should be increased. It was agreed that, unless the Executive Board decided otherwise, the rate of remuneration shall be three fifths of the combined market interest rates in the United States, Germany, the United Kingdom, France, and Japan, rounded to the nearest ¼ per cent. Rule Q-1(b), which provides that the interest rate on holdings of SDRs shall be equal to the rate of remuneration, was adjusted to reflect the changes in Rule I-10.

On August 2, 1976, the Executive Board further amended its Decision No. 3457-(71/121) G/S, as amended, to provide a redefinition of the maximum amount of SDRs that a participant may acquire to promote reconstitution if the participant is obliged to pay charges to the General Account or discharge repurchase obligations in SDRs during the month in which the acquisition is made. The raising of the limit for acquisition by a participant under this amendment of the Decision necessitated a change in Rule P-6 in order to make it possible for the Fund to provide a total amount of SDRs to a participant equal to the amount it would need to obtain in accordance with the calculation under Rule P-2, increased by the amount of any charges to be paid or any repurchase obligation in SDRs to be discharged during the month following the calculation.

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

1976 Annual Meeting

International Monetary Fund

Attachment 1. Rules and Regulations Amended Since the 1975 Annual Meeting

  • Rule I-10. Text as amended June 30, 1976.

    • (a) Unless the Executive Board decides otherwise, the rate of remuneration for each calendar quarter shall be three fifths of the combined market interest rate as determined in (b) below. The rates of remuneration calculated under this (a) shall be rounded to the nearest ¼ per cent.

    • (b) The combined market interest rate shall be the average of the daily interest rates for the obligations, combined in accordance with the weights listed below, for the six-week period ending on the fifteenth day of the last month before the calendar quarter for which the rate of remuneration is determined:

      Per cent
      Market yields for three-month U.S. Treasury bills47
      Three-month interbank deposits rate in Germany18
      Market yields for three-month U.K. Treasury bills13
      Three-month interbank money rate against private paper in France11
      Call money market rate (unconditional) in Japan11
      100

    • (c) The Fund will review the rate of remuneration before the beginning of each calendar quarter.

  • Rule Q-1(b). Text as amended June 30, 1976.

    The interest rate on holdings of special drawing rights shall be equal to the rate of remuneration in effect pursuant to Rule I-10(a).

  • Rule P-6. Text as amended August 2, 1976.

    A participant may receive special drawing rights in a transaction prescribed by the Fund to promote reconstitution by the participant in a total amount equal to the amount it would need to obtain in accordance with the calculations under Rule P-2, increased by the amount of any charges to be paid, or repurchase obligations in special drawing rights to be discharged, by the participant to the General Account during the month following the calculation under Rule P-2. To the extent that a participant may receive special drawing rights in a transaction under any prescription, in accordance with this Rule, the Fund shall provide special drawing rights held in the General Account to the participant at its request for gold or currency acceptable to the Fund. A participant shall consult the Managing Director before making a request under this Rule.

Annex IV to Report II

October 4, 1976

Dear Mr. Chairman:

I am transmitting herewith on behalf of the Executive Board a proposed Resolution,11 which is recommended for adoption by the Board of Governors, on the admission of Guinea-Bissau 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

1976 Annual Meeting

International Monetary Fund

Annex V to Report II

October 4, 1976

Dear Mr. Chairman:

I am transmitting herewith on behalf of the Executive Board a proposed Resolution,12 which is recommended for adoption by the Board of Governors, on the admission of Surinam 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

1976 Annual Meeting

International Monetary Fund

Report IV1

October 7, 1976

Mr. Chairman:

The Joint Procedures Committee met on October 7, 1976 and submits the following report:

1. Place and Date of 1978 Annual Meetings

The Committee recommends that the 1978 Annual Meetings be convened in Washington, D. C. in late September.

2. Officers and Joint Procedures Committee for 1976/1977

The Committee recommends that the Governors for Ireland be Chairmen, and the Governors for Bolivia and Togo be Vice Chairmen, of the Boards of Governors of the Fund and of the Bank and its affiliates, 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: Austria, Bangladesh, Barbados, Bolivia, Brazil, Costa Rica, Egypt, Fiji, France, Germany, Indonesia, Ireland, Japan, Mauritania, Pakistan, Romania, Sierra Leone, Togo, United Arab Emirates, United Kingdom and United States.

It is recommended that the Chairmen of the Joint Procedures Committee shall be the Governors for Ireland and the Vice Chairmen shall be the Governors for Bolivia and Togo and that the Governors for Egypt shall serve as Reporting Members.

Approved:

/s/ Mohammed Imady/s/ A. Szasz
/s/ Sadek Ayoubi/s/ W. F. Duisenberg
Syrian Arab Republic—ChairmenNetherlands—Reporting Members

Report I and the Resolution recommended therein were adopted by the Boards of Governors of the Fund and of the Bank, IFC and IDA, in Joint Session, on October 5, 1976.

Resolution No. 31-9, see page 308. The Bank parallel Resolution No. 305 is published in the Bank, IFC and IDA Summary Proceedings, 1976.

Resolution No. 31-9, see page 308.

Resolutions No. 29-9 (IMF) and No. 294 (IBRD).

Resolutions No. 31-9 (IMF) and No. 305 (IBRD).

Resolution No. 31-9, see page 308.

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 October 8, 1976.

See pages 22–25.

Resolution No. 31-10, see page 308.

Resolution No. 31-11, see page 309.

Resolution No. 31-12, see pages 309–11.

Resolution No. 31-13, see pages 311–13.

Resolution No. 31-14, see pages 313–14.

His Excellency Sidi Ould Cheikh Abdallahi, Minister of Planning and Industrial Development of Mauritania, and His Excellency Ibrahima A. Ba, Minister of Planning of Mauritania, served as alternate members at the September and January meetings, respectively, to permit Minister Konan Bédié to serve as Chairman.

Results include ballots cast by the Governors for Bahrain and Oman pursuant to Resolution No. 31-14, adopted October 8, 1976.

Cambodia, the Republic of China, the Comoros, and South Africa did not participate in this election.

Resolution No. 31-12, see pages 309–11.

Resolution No. 31-13, see pages 311–13.

Report III dealt with the business of the Boards of Governors of the Bank, IFC and IDA. Report IV 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 October 8, 1976.

    Other Resources Citing This Publication