Reports of the Joint Procedures Committee
- International Monetary Fund. Secretary's Department
- Published Date:
- November 1984
Other Members: Brazil, Cyprus, Dominica, Egypt, France, Federal Republic of Germany, Morocco, Peru, Saudi Arabia, Solomon Islands, Sudan, Sweden, Thailand, United Kingdom, United States, Venezuela, Zaïre, Zimbabwe
September 24, 1984
The Joint Procedures Committee met on September 24, 1984 and submits the following report and recommendations:
1. Membership of the People’s Republic of Mozambique—Fund
The Committee considered a Resolution, recommended by the Executive Board of the Fund on September 14, 1984, on the admission of the People’s Republic of Mozambique to membership in the International Monetary Fund, set forth in Fund Document No. 6.
The Committee recommends that the Board of Governors of the Fund adopt the proposed Resolution.2
2. Membership of the People’s Republic of Mozambique—Bank, IFC, and IDA
The Committee considered the Report of the Executive Directors of the Bank and IDA and the Board of Directors of IFC dated September 19, 1984, on the admission of the People’s Republic of Mozambique to membership in the World Bank, IFC, and IDA, set forth in Bank, IFC, and IDA Document No. 4.
The Committee recommends that the Boards of Governors of the Bank, IFC, and IDA adopt the draft Resolution attached to the said Report.3
|/s/ Noboru Takeshita||/s/ C. R. Rye|
September 26, 1984
At the meeting of the Joint Procedures Committee held on September 26, 1984, 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. 1984 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. 1984 Regular Election of Executive Directors
The Committee noted that the 1984 Regular Election of Executive Directors of the Fund [Annex I] had taken place and that the next Regular Election of Executive Directors will take place at the Annual Meeting of the Board of Governors in 1986.
4. Financial Statements, Report on Audit, and Administrative Budget
The Committee considered the Report on Audit for the financial year ended April 30, 1984, the Financial Statements contained therein (Fund Document No. 8 and Appendix VIII of the 1984 Annual Report), and the Administrative Budget for the financial year ending April 30, 1985 (Fund Document No. 10 and Appendix VI of the 1984 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
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 24, 1984, reproduced as Fund Document No. 11, regarding amendments of the Rules and Regulations set forth in Attachment 1 to that document [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. II.4
|/s/ Noboru Takeshita|
|/s/ C. R. Rye|
Annex I to Report II. Regulations for the Conduct of the 1984 Regular Election of Executive Directors
1. Definitions: In these Regulations, 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 or Vice Chairman acting as Chairman of the Board.
(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 1984 Regular Election of Executive Directors.
(g) “Eligible votes” means the total number of votes that can be cast in the election.
2. Date of Election: The election shall be held during a plenary session of the 1984 Annual Meeting to be held Tuesday, September 25, 1984.
3. Eligibility: The Governors eligible to vote in the election shall be all of the Governors except those of the members that:
(a) are entitled to appoint an Executive Director pursuant to Article XII, Section 3(b)(i);
(b) have notified the Managing Director, in accordance with the procedure established by the Executive Board, of their intention to appoint an Executive Director pursuant to Article XII, Section 3(c).
4. Schedule E: Subject to the supplementary regulations set forth herein, the provisions of Schedule E of the Articles shall apply to the conduct of the election.
5. Number of Executive Directors to be Elected: Sixteen Executive Directors shall be elected. “Sixteen persons” shall be substituted for “fifteen persons” in paragraphs 2, 3, and 6, and “fifteen persons” shall be substituted for “fourteen persons,” and “sixteenth” shall be substituted for “fifteenth” in paragraph 6 of Schedule E.
6. Proportion of Votes Required to Elect: In paragraphs 2 and 5 of Schedule E, “four percent,” and in paragraphs 3, 4, and 5, “nine percent,” shall not be changed.
(a) Any person nominated by one or more Governors eligible to vote in the election shall be eligible for election as an 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.
8. 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.
9. Ballots and Balloting:
(a) One ballot form shall be furnished, before a ballot is taken, to each Governor eligible to vote. On any particular ballot only ballot forms distributed for that ballot shall be counted.
(b) Each ballot shall be by a call of members whose Governors are eligible to vote and each ballot form signed by the Governor, shall be deposited in the ballot box.
(c) When a ballot has been completed, the Chairman shall cause the ballot forms to be counted and shall announce the names of the persons elected promptly after the tellers have completed their tally of the ballot forms. 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 eligible to vote.
(d) If the tellers are 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 the ballot form, if corrected, shall be deemed valid.
(e) If a Governor does not vote on any ballot, he shall not be entitled to vote on any subsequent ballot and his votes shall not be counted, under Article XII, Section 3(0(iii), toward the election of any Executive Director.
(f) If, at the time of any ballot, a member does not have a duly appointed Governor, such member or its Governor shall be taken not to have voted on that ballot.
10. If on any ballot there are more nominees than the number of Executive Directors to be elected and two or more nominees tie with the lowest number of votes, no nominee shall be ineligible for election in 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.
11. If on any ballot two or more Governors having an equal number of votes have voted for the same nominee and the votes of one or more, but not all, of these Governors could be deemed under paragraph 4 of Schedule E to have raised the total votes received by the nominee above nine percent 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.
12. When on any ballot the number of nominees is the same as the number of Executive Directors to be elected, and no nominee is deemed to have received more than nine percent of the eligible votes, each nominee shall be considered elected by the number of votes received even though a nominee may have received less than four percent of the eligible votes.
13. If the votes cast by a Governor raise the total votes received by a nominee from below to above nine percent of the eligible votes, the votes cast by the Governor shall be deemed under paragraph 4 of Schedule E not to have raised the total votes of the nominee above nine percent.
14. Any member whose Governor has voted on the last ballot for a nominee not elected may, before the effective date of the election, as set forth in section 16 below, designate an Executive Director who was elected, and that member’s votes shall be deemed to have counted toward the election of the Executive Director so designated.
15. Announcement and Review of Result:
(a) After the tally of the last ballot, the Chairman shall cause to be distributed a statement setting forth the result of the election.
(b) The Board of Governors, at the request of any Governor, will review the result of the election in order to determine whether, in light of the objectives set forth in Chapter O, Section 2 of the Report by the Executive Directors to the Board of Governors on the Proposed Second Amendment to the Articles of Agreement an additional Executive Director should be elected to serve for the term of office commencing November 1, 1984.
16. Effective Date of Election of Executive Directors: The effective date of election shall be November 1, 1984, and the term of office of the elected Executive Directors, and of any Executive Director appointed under Article XII, Section 3(c), shall commence on that date. Incumbent elected Executive Directors shall serve through October 31, 1984.
17. 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. 39-2, September 4, 1984
|Candidate5 Elected||Members Whose Votes Counted Toward Election6||Number of Votes|
|Central African Republic||554|
|São Tomé and Principe||290|
|Jacques de Groote||Austria||8,006|
|Syrian Arab Republic||1,641|
|United Arab Emirates||2,276|
|Yemen Arab Republic||683|
|Yemen, People’s Democratic|
|J. E. Ismael||Burma||1,620|
|Lao People’s Dem. Rep.||543|
|Robert K. Joyce||Antigua and Barbuda||300|
|St. Christopher and Nevis||295|
|Trinidad and Tobago||1,951|
|Ram N. Malhotra||Bangladesh||3,125|
|Edwin I. M. Mtei||Botswana||471|
|Fernando Luis Nebbia||Argentina||11,380|
|Pedro Pérez Fernandez||Costa Rica||1,091|
|A. R. G. Prowse||Australia||16,442|
|Papua New Guinea||909|
|Iran, Islamic Republic of||6,850|
|/s/ Peace Ayisi-Okyere|
|/s/ D. H. Boot|
Annex II to Report II
September 24, 1984
Dear Mr. Chairman:
In accordance with Section 16 of the By-Laws, the attached amendments of the Rules and Regulations adopted since the 1983 regular meeting (Annex I) are submitted for review by the Board of Governors. A draft resolution for approval by Governors appears in Annex II.
On January 6, 1984, the Executive Board amended Rule I-10 to provide for a gradual increase in the rate of remuneration relative to the SDR interest rate (the remuneration coefficient), thereby improving the return on the remunerated reserve tranche positions held by members and narrowing the disparity between the return on those positions and the return on other Fund-related claims. It was recognized that a large-scale expansion of Fund credit had occurred and the total of reserve tranche positions had increased sharply, both in absolute amounts and also as a proportion of members’ reserves. Further, the volume of credit extended by the Fund was expected to continue to increase at a rapid pace in the period ahead, which implied a further expansion of remunerated reserve tranche positions. Yet reserve tranche positions represented the only creditor claims on the Fund which yielded a rate of return (the rate of remuneration) that was significantly below market-related rates of interest, even though they can be viewed as somewhat less liquid than other Fund-related assets. The amended Rule prescribes a formula under which the rate of remuneration, which stood at 85 percent of the SDR interest rate, will be raised by 3.33 percentage points on May 1 of 1984, 1985, and 1986, or by a larger amount depending on interest rate movements, with the possibility of further increases thereafter. The rate of remuneration will be reviewed in the year following May 1, 1986.
Rule G-4(b) was amended on May 1, 1984, effective July 3, 1984, to modify slightly the provision establishing the dates on which purchases under stand-by or extended arrangements involving resources borrowed in connection with the enlarged access policy are normally made. Rule G-4(b) provides that purchases involving these resources will normally be made only twice a month, for value on either the 15th day or the last day of the month. As originally adopted, the Rule also provided that if one of these days was not a business day, the value date would be the next business day. However, members have experienced occasional inconvenience with this provision when the last day of the month was not a business day, since the effect has been to shift the value date of the purchase into the next month (or into the next year, if the month in question was December). This has led to requests that the Fund permit purchases to be completed within the same month, as an exception to the normal rule. During 1984 and 1985, seven out of eight calendar quarters would end on a non-business day, so that requests for exceptions to the Rule would be likely to occur with greater frequency. Accordingly, it was decided to modify the Rule by shifting the value dates to the preceding business day, instead of the following business day, whenever the specified value date is not a business day.
On May 30, 1984, Rule I-6(5) was amended to revise the method of calculating charges levied by the Fund on holdings of currency acquired under the policy on enlarged access. Purchases under this policy are normally financed with borrowed resources, and Rule I-6(5) provides for the rate of charge on outstanding purchases in each six-monthly period to be calculated on the basis of the net cost of borrowing by the Fund for the period. As originally formulated, Rule I-6(5) did not provide a basis for including the cost of ordinary resources in the cost of borrowing by the Fund for the purpose of calculating the rate of charge applicable to outstanding purchases, in the event that ordinary resources would be used to finance EAR purchases. This will be the case because in the period through January 1985, a considerable amount of EAR borrowing is scheduled for repayment with ordinary resources. In view of this, the Executive Board decided to amend Rule I-6(5) so as to impute a borrowing cost to the amount of ordinary resources used to finance outstanding purchases, and include this cost in the calculation of the rate of charge on holdings derived from such purchases. For purposes of this calculation, the imputed borrowing cost of the use of ordinary resources will be the daily amount of such resources multiplied by a rate of interest computed in the same manner as the SDR interest rate, except that the underlying yields on individual currency instruments will be the same as those used in calculating the interest on the Fund’s borrowing under its 1981 agreement with the Saudi Arabian Monetary Agency.
The Executive Board has made no other changes in the Rules and Regulations since the last Annual Meeting.
Very truly yours,
J. de Larosière
Chairman of the Executive Board
Chairman of the Board of Governors
1984 Annual Meeting
International Monetary Fund
Attachment 1. Rules and Regulations Amended Since the 1983 Annual Meeting
1. Rule I-10. Text as amended January 6, 1984.
(a) The rate of remuneration shall be equal to 85 percent of the rate of interest on holdings of SDRs under Rule T-l (hereafter referred to as the “SDR interest rate”). The relationship of the rate of remuneration to the SDR interest rate will be referred to as the “remuneration coefficient.”
(b) Beginning April 30, 1984, the remuneration coefficient during each quarter shall be at the level determined under (1), (2), (3), and (4) below, but no higher than permitted by Article V, Section 9(a):
(1) During the period May 1, 1984 to April 30, 1987, the remuneration coefficient shall be the higher of (i) or (ii) below:
(i) The remuneration coefficient in effect on January 1, 1984 increased by 3.33 percentage points in each of the three financial years beginning May 1, 1984, May 1, 1985, and May 1, 1986;
(ii) The remuneration coefficient in effect on January 1, 1984, increased or decreased on the first day of each quarter by 1 percentage point for each ⅙ of 1 percentage point that the SDR interest rate on the day before the beginning of the quarter is below or above the SDR interest rate in effect on April 30, 1984, provided that the remuneration coefficient in any quarter in each of these three financial years shall not be more than 2.5 percentage points above the amount of the coefficient for that year as determined under (i) above.
(2) Following the adjustment in the remuneration coefficient on May 1, 1986, the rate of remuneration shall be reviewed before May 1, 1987. This review shall be conducted in the light of all the relevant considerations, including, in particular, the SDR interest rate and the rate of charge.
(3) Beginning May 1, 1987, the remuneration coefficient shall be the higher of (i) or (ii) below:
(i) The remuneration coefficient existing at the end of the preceding financial year;
(ii) A remuneration coefficient of 95 percent, increased or decreased on the first day of each quarter by 1 percentage point for each ⅙ of 1 percentage point that the SDR interest rate on the day before the beginning of a quarter is below or above the SDR interest rate on April 30, 1987, provided that the remuneration coefficient in any quarter of a financial year shall not be more than 2.5 percentage points above the level at the end of the preceding year.
(4) The rate of remuneration, while less than 100 percent of the SDR interest rate, shall be rounded to the nearest two decimal places.
(c) The operation of (b) above shall be reviewed on the occasion of the reviews of the rate of charge under Rule I-6(4) and the SDR interest rate under Rule T-l(d).
(d) If the rate of charge on holdings specified in Rule I-6(4) should exceed the SDR interest rate, the Executive Board shall review the remuneration coefficient, and, in particular, will consider whether the remuneration coefficient should be set, within the range in Article V, Section 9(a), at such a level as would permit the rate of charge to be set under Rule I-6(4)(a) or (b) at the same level as the SDR interest rate referred to above and still meet the target amount of net income for the financial year.
2. Rule G-4(b). Text as amended May 1, 1984, effective July 3, 1984.
(b) The value date for a purchase that involves resources borrowed by the Fund under the policy on enlarged access, and that is in accordance with the stand-by or extended arrangement, will normally be either the 15th or the last day of the month, or the preceding business day if the day selected is not a business day. If the request for the purchase is not received in the Fund in time for its instructions to be issued for the first of these value dates following the date of receipt, the purchase will be executed at the next such value date.
3. Rule I-6(5). Text as amended May 30, 1984.
(5) The rate of charge on holdings of a member’s currency acquired as a result of the member’s purchases of borrowed currency under the Policy on Enlarged Access to the Fund’s Resources (Executive Board Decision No. 6783-(81/40)) during a six-month period ending June 30 or December 31 shall be equal to the total, expressed as a percentage per annum, of:
(i) the net cost of borrowing by the Fund under that Policy for the period, calculated in accordance with (a), (b) and (c) below and
(ii) the imputed borrowing cost of the amount of the ordinary resources being used to finance purchases of borrowed currency calculated in accordance with (d) below, plus 0.2 percent per annum.
(a) The net cost of borrowing for a six-month period ending June 30 or December 31 shall consist of the actual gross cost of borrowing to finance purchases under the Policy assignable to the period less net income during the period from the temporary employment of the borrowed funds.
(b) Actual gross costs of borrowing shall comprise:
(i) interest paid or accrued to lenders on the average daily amount of balances borrowed; and
(ii) fees, commissions, and any other primary costs directly payable to lenders or incurred in order to secure the borrowed funds, prorated for six-month periods ending June 30 and December 31 in proportion to the duration of the borrowing arrangements to which such costs relate, or to the period covered by these costs.
(c) Net income from temporary employment of borrowed funds pending disbursement shall be determined by taking into account:
(i) income received and income accrued from investments or other operations to secure a rate of return;
(ii) operational expenses (paid and accrued) incurred directly by the Fund in order to obtain this income, prorated over the period to maturity of the investment; and
(iii)any net gain or loss, calculated to the end of each six-month period ending June 30 or December 31, resulting from exchange valuation adjustments of currency balances and investments representing the undisbursed proceeds of borrowing in terms of the SDR.
(i) The imputed borrowing cost of the use of ordinary re-sources being used to finance purchases of borrowed currency shall be the product of the daily amount of such resources as determined in accordance with (ii) below multiplied by the rate of interest for the weekly period commencing each Monday calculated in accordance with the method set forth in Rule T-l(b) and (c) for determining the rate of interest on holdings of SDRs except that, in place of the rates or yields for the preceding Friday on the instruments listed in Rule T-l(c), the yields for the preceding Wednesday on the instruments specified under paragraph 3(b) of Annex A to the letter referred to in Executive Board Decision No. 6843-(81/75) adopted May 6, 1981, shall be used.
(ii) The amount of ordinary resources being used to finance purchases of borrowed currency is equal to the amount of the Fund’s holdings of currency resulting from members’ purchases of borrowed currency under the Policy on Enlarged Access less the outstanding amount of currency borrowed by the Fund to finance such purchases after deducting the amounts of currency held in the Borrowed Resources Suspense Accounts.
September 26, 1984
The Joint Procedures Committee met on September 26, 1984 and submits the following report:
1. Development Committee
The Committee noted that the 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) has been presented to the Boards of Governors of the Fund and the Bank pursuant to paragraph 5 of Resolutions Nos. 29-9 and 294 of the Fund and the Bank, respectively (Fund Document No. 5 and Bank Document No. 3) [Annex].
The Committee recommends that the Boards of Governors of the Fund and the Bank note the report and thank the Development Committee for its work.
2. Officers and Joint Procedures Committee for 1984/85
The Committee recommends that the Governor for Senegal be Chairman, and the Governors for Canada and Ecuador 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 Chairman, normally by correspondence and, if the occasion requires, by convening; and that this Committee shall consist of the Governors for the following members: Cameroon, Canada, Dominican Republic, Ecuador, France, Germany, Iceland, Indonesia, Italy, Japan, Mexico, New Zealand, Qatar, Saudi Arabia, Senegal, Sri Lanka, Swaziland, Syrian Arab Republic, Turkey, United Kingdom, United States, and Yemen Arab Republic.
It is recommended that the Chairman of the Joint Procedures Committee shall be the Governor for Senegal, and the Vice Chairmen shall be the Governors for Canada and Ecuador, and that the Governor for Iceland shall serve as Reporting Member.
|/s/ Noboru Takeshita|
|/s/ C. R. Rye|
Annex to Report IV
September 23, 1984
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 1983-June 1984. 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.
Ghulam Ishaq Khan
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 1983-June 1984)
1. This is the tenth 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 the period from July 1983 to June 1984.
2. The Development Committee was established in 1974 on the recommendation of the Committee on Reform of the International Monetary System and Related Issues (Committee of Twenty) to carry forward the study of all aspects of the broad question of transfer of real resources to developing countries and to recommend measures to implement its conclusions. It was thus designed to provide a focal point at a high political level in the structure of international economic cooperation for the formation of a comprehensive overview of the development process, for efficient and prompt consideration of development issues and for coordination of international efforts to deal with problems of financing development. According to the Resolutions establishing the Committee, the consideration of the question of the transfer of real resources to developing countries was to be undertaken in relation to existing or prospective arrangements among countries, including those involving international trade and payments, the flow of capital, investment and official development assistance (ODA).
3. The members of the Development Committee were to be Governors of the Bank and the Fund, ministers, or others of comparable rank and were to be appointed in turn for successive periods of two years by the members of the Bank and the members of the Fund. Each member of the Committee was to be assisted by seven Associates and the Executive Directors of the two institutions representing his constitutency on the Executive Boards.
4. Against the background of analyses and projections contained in the IBRD’s World Development Report 1983 and the IMF’s World Economic Outlook and other studies specially prepared, the Committee during the year under review considered a number of key issues relating to promotion of development and to the improvement of capital flows and their effective utilization in the developing countries. The agendas were designed to focus the attention of the ministers, representing developed and developing countries, on important development issues of mutual interest and urgency in an effort to promote international consensus and to facilitate decisions in appropriate bodies at national and international levels.
5. The Committee held two meetings during the year. The first meeting was in Washington, D.C. on September 26, 1983 at the time of the Annual Meetings of the Boards of Governors of the Bank and the Fund. The other meeting during the year—the twenty-third in the series—was also held at Washington, D.C. on April 13, 1984. Both meetings were chaired by His Excellency Ghulam Ishaq Khan, Minister for Finance, Commerce and Economic Coordination of Pakistan.
6. At the technical and preparatory level, the Task Force on Concessional Flows, which had been set up by the Committee in May 1982 to conduct an in-depth study of the problems affecting the volume, quality and effective use of concessional flows, proceeded with its endeavor during the year. Its Chairman, Mr. John P. Lewis, Professor at Princeton University, presented the Task Force’s first status report on its work at the meeting of the Committee in September 1983.
7. The Committee is currently operating under the procedures established in April 1979 which placed the responsibility for the organization of its work on the Chairman, the President of the Bank, and the Managing Director of the Fund, assisted by the Executive Secretary. The other measures then adopted included greater and closer involvement of the staffs and Executive Boards of the two institutions in the work of the Committee. During the year under review it was decided to replace the practice of presenting Annotated Agendas with reports from the President of the Bank and the Managing Director of the Fund. This approach in procedure was calculated to provide greater flexibility, a more open and freer discussion and help counteract the feeling of pre-emptiveness created by the annotations. These changes in the organization and procedures have contributed to the effectiveness of the Committee but the search for the realization of the Committee’s full potential continues to receive the attention of all involved in its operations.
8. The main thrust of the Committee’s work in the year under review continued to be on capital flows to the developing countries, both nonconcessional and concessional, and both public and private. Particular emphasis was given to the crucial importance of the IDA-VII Replenishment, the lending program of the World Bank and the International Finance Corporation (IFC), and implications for increase in their capital requirements and the need, in accordance with past policy and practice, for early action on a Selective Capital Increase (SCI) for the World Bank following and in line with the Eighth General Review of Quotas in the Fund. A Selective Capital Increase was successfully negotiated, and agreement was reached on the relative contributions of major donors to ID A-VII. The importance of trade and its linkages with development providing expanding export opportunities to developing countries and the serious economic situation in sub-Saharan Africa with its social and political implications are the other important specific issues which received special attention.
II. Committee Consideration of Major Development Issues During the Year July 1983-June 1984
A. Economic Situation and Prospects Facing the Developing Countries in the 1980s (World Development Report 1983 and the World Economic Outlook as Background Documents)
9. The IBRD’s World Development Report 1983 and the IMF’s World Economic Outlook both served as valuable background documents for the Committee ‘ s discussions on many current and prospective issues. These background documents showed that there were clear signs of recovery from the worst recession in 40 years. The process had begun in many industrial countries where inflation had been sharply reduced, unemployment levels had peaked and in some cases were falling and economic activity and world trade had gathered strength.
10. It was, however, recognized that while economic recovery in the industrialized countries was a necessary prerequisite, it was not by itself sufficient for restoring growth momentum in the developing countries, many of which continued to face a difficult situation and would have to undertake sustained adjustment efforts. The slow rate of growth averaging less than 1 percent in 1983 resulted in a significant decline in per capita incomes in many developing countries. Indeed, in sub-Saharan Africa per capita incomes had been declining for over a decade and in much of Latin America for the past three years. For these countries it will take years to regain even previous levels of per capita incomes. Besides, there was little improvement in inflation rates in developing countries while the external trade environment remained constrained by protectionist pressures and practices. Further, the Committee expressed great concern on the high level of real interest rates which have significantly added to the debt service obligations of the developing countries. However, recent economic recovery in major developed countries has now begun to help developing country exports.
11. The challenge, therefore, was how the present recovery could be sustained, strengthened, and extended in a non-inflationary environment to developing countries. The durability and strength of the recovery can be assured only if both groups of countries—developed and developing—were to share in growth since growth in one will stimulate and sustain growth in the other in this increasingly interdependent world. In addition to the performance of the industrial countries, the debt situation and the future of capital flows—both concessional and nonconcessional—to the developing countries, the international trade environment and the special problems of the least developed countries, particularly in sub-Saharan Africa, all need special and urgent attention.
12. The Committee, therefore, noted that while the world economic stiuation is more promising than a year ago, the attainment of sustained growth and its extension to developing countries requires improved policy performance by both developed and developing countries, increase of private and official capital flows, and improved trade prospects.
B. Concessional Flows
(i) ODA Flows
13. The low-income developing countries are heavily dependent on flows of ODA. Thus, for countries described as “least developed” by the United Nations, of which two thirds are in sub-Saharan Africa, ODA corresponds to 10 percent of their combined GNP, 50 percent of their current imports and no less than 80 percent of their investment.
14. In the 20-year period between 1960 and 1980, ODA, in absolute amount, more than doubled in real terms while in the 1970 decade it grew by about 5 percent a year. The medium-term increase now forecast by the OECD’s Development Assistance Committee is only 2-3 percent per annum which is about half the rate of increase achieved in the preceding decade. In fact, real ODA flows are estimated to have been at about the same level in 1982 as in 1980. As a result, there has been a slowdown in programs dependent on concessional flows. This slowdown could postpone the implementation of important projects at a time when aid recipients’ needs are substantial.
15. The International Development Association (IDA) was established over 20 years ago to provide concessional assistance to low income countries which have no, or very limited, access to private capital and cannot afford to borrow funds carrying high interest rates and short maturities. IDA has helped to expand the Bank’s development role in offering low-income countries concessional resources and policy advice. The initial fund of just under $1 billion has been replenished six times making a total of $30 billion by the end of 1980 when it accounted for 16 percent of total ODA.
16. IDA has become a most valuable source for transferring concessional resources effectively to the poorest countries. Its role in promoting development is widely acknowledged. A proposal of $16 billion for the Seventh Replenishment was made out by IDA management to accommodate an expanded recipient community with the entry of China, the increased requirements of the poorest countries in achieving food self-sufficiency, in supporting structural adjustment programs and in the attainment of reasonable growth rates.
17. The prolonged negotiations, however, concluded on an IDA-VII Replenishment of $9 billion on which agreement of all donors could be reached in time to meet new commitments without interruption from July 1, 1984 onwards. This amount represents a decline of 24 percent in real terms from annual IDA-VI commitment levels and a substantially larger decline as compared with IDA-VI as originally negotiated. It was felt by most members that the size therefore imposes severe constraints on the Association’s ability to meet the development assistance needs of its recipients. The amount was considered inadequate by most donors who provided the Association’s management with a mandate to raise additional resources. The management is now engaged in working out suitable modalities for creating a Supplementary Fund acceptable to the prospective participants.
(iii) Task Force on Concessional Flows—A Progress Report
18. In his interim report to the Committee at its meeting in Washington, D.C. in September 1983, the Task Force Chairman, Professor John P. Lewis, emphasized that the main subjects occupying the Task Force—aid volume, aid effectiveness, and the “mandate for aid”—are intimately interconnected. Strengthening the mandate for aid can be expected to contribute to a greater supply. But such strengthening may, in turn, depend at least partly on establishing greater confidence in the effectiveness of aid. On the other hand, greater effectiveness cannot be achieved without a requisite volume of resources in support of policy change and institutional innovation. Professor Lewis expressed the hope that the Task Force would be able to present its final report to the Development Committee during the year 1985.
19. The Task Force has currently commissioned a team of independent consultants to assess aid effectiveness. Professor Robert Cassen of the Institute of Development Studies of the University of Sussex in England heads the team of consultants. Several members of the team are engaged in investigating the issue of aid effectiveness in seven countries: Bangladesh, Colombia, India, Kenya, Korea, Malawi, and Mali. Other consultants are doing functional studies, such as examining food aid and technical assistance and comparing bilateral and multilateral aid. Others are assessing the evaluating materials provided by bilateral and multilateral donors, to draw conclusions about aid effectiveness.
C. Nonconcessional Flows
World Bank’s Lending Program and Implications for the Bank’s Capital Requirements
20. Foreign capital—private and official (bilateral and multilateral)—has traditionally played a key role in the development of less developed countries. The middle-income countries rely heavily on external financing of a nonconcessional nature particularly from private sources. Thus, private lending grew annually by 12 percent in real terms from 1970 to 1980 and private direct investment by over 8 percent. Official nonconcessional flows also increased markedly during the decade of the 1970s rising by 14 percent a year in real terms.
21. The World Bank has been an important participant in this process. The Bank’s commitments grew by an average of 7 percent a year and its disbursements by an average of 12 percent a year in real terms between FY1970-80.
22. However, developments in the past year or two, represented by a decrease in the Bank’s net disbursements and in particular a dramatic decline in private lending, pose serious questions to developing countries in the matter of obtaining investment resources required by them for implementing their adjustment programs and for achieving long-term growth.
23. The need to maintain an appropriate level of lending and disbursements is important at a time when the Bank’s borrowing members are experiencing serious financial problems and have undertaken important programs of structural adjustment which need support. In this context, the Committee’s support resulted in agreement on a Selective Capital Increase of $8.4 billion following in line with the Eighth General Review of Quotas in the Fund.
24. The Committee welcomed the intention of the World Bank management to prepare proposals concerning the future role of the Bank and the implications for longer-term capital requirements, including the need for a General Capital Increase. This work is under preparation and a comprehensive paper on the subject is expected to be circulated for consideration by the Development Committee at its spring 1985 meeting. The purpose is to enable the Bank to continue to respond meaningfully to the carefully assessed requirements of the developing countries for adjustment and growth.
D. External Debt Problems of Developing Countries
25. Following a rapid expansion, during the 1970s and into the early 1980s, external borrowing and growth in debt of developing countries declined markedly in the last two years. External debt remains substantial, however, and many of the countries that face serious payments problems have pursued or are pursuing vigorous adjustment programs with determination to restore health to their economies and improve their future creditworthiness. The Committee expressed its satisfaction with the progress achieved so far by the international community in addressing the debt problem of developing countries. The situation, nevertheless, needed careful watching and the Committee requested that the Fund and the Bank continue to examine the debt problem of developing countries.
E. IFC Capital Increase
26. The outlook for direct investment has become more attractive. External financing has become both scarce and costly and there is now a better understanding of the role of direct investment in development among investors and host governments. Moreover, the outflows related to direct investment—in the form of profit remittances—are directly dependent on the success of the enterprise, and there is more flexibility as to their timing. In the circumstances, the Committee agreed on the importance of encouraging direct private investment especially in the poorer countries and welcomed progress in the preparation of an expanded investment program for IFC through a management proposal of a $750 million capital increase and called for early action by the IFC Executive Board. This would help expand capital flows from the World Bank Group to the private sector in the developing countries.
27. In connection with this subject, the Committee also took note of a study on investment incentives and performance requirements undertaken by the World Bank on the earlier recommendations of the Task Force on Private Foreign Investment. The study will facilitate a better understanding of the impact and choice of policies pertaining to international direct private investment.
F. Sub-Saharan Africa
28. The Committee paid special attention to the particular situation faced by the sub-Saharan African countries. The subject came up for discussion at both meetings held during the year. The Committee noted that all the major economic indicators gave cause for serious concern. Per capita incomes are declining and in 1983 were below the level of the mid-1960s in many African countries. The region faces a burdensome debt situation and export commodity prices in real terms fell to levels in 1982 lower than at any time since World War II. Indeed, between 1973 and 1982, low-income Africa lost as much as 21 percent of the purchasing power of its exports. During the last couple of years flows of concessional assistance, upon which Africa depends heavily, have stagnated even in nominal terms, and the food situation has worsened sharply as a result of severe drought in many parts of the region without any abatement in the rate of population growth, creating human and economic problems of major proportions.
29. The Committee expressed concern at the continuing grim prospects for sub-Saharan Africa and agreed that increased concessional assistance was urgently needed for both bilateral and multilateral sources to support domestic policies aimed at improving sub-Saharan Africa’s long-term development prospects. The Committee also reiterated its earlier view that Africa should continue to receive high priority in the allocation of IDA resources. The Committee welcomed an undertaking by the Bank/IDA management to prepare a program for Africa for its September 1984 meeting to guide the Bank and the international community in helping sub-Saharan Africa deal with its severe human, social, and economic problems.
G. Linkages Between Trade and the Promotion of Development
30. In view of the importance of an open trading system for the growth and development prospects of developing countries, the Committee held an extensive discussion on the linkages between trade and development on the basis of background papers prepared by the Bank and Fund staffs. While the Committee noted with satisfaction that exports had begun to revive, it expressed serious concern regarding the continuing rise in protectionism which is making more difficult the orderly implementation of the adjustment process in all countries, developing and developed. Moreover, for some heavily indebted developing countries relying on the openness of markets, protectionism has aggravated their serious balance of payments problems, making it more difficult for them to service their debt in an orderly fashion. The increase in trade barriers is also retarding the much-needed structural adjustment in both developed and developing countries. The Committee emphasized that expanded trade opportunities, including more remunerative prices for primary commodities, would provide a critical impetus to the extension of world economic recovery and contribute to restoring the long-term growth and development prospects of developing countries. Trade liberalization and improved domestic economic policies in all countries, together with enlarged flows of external finance to developing countries, are mutually reinforcing actions which would help accelerate growth momentum of developing countries.
31. The Committee invited all governments to step up their efforts to seek effective solutions to the current problems in international trade relations, bearing in mind the special needs of developing countries. The Committee welcomed the indications of a growing interest among governments in launching a new round of multilateral trade negotiations under the aegis of the GATT, which should continue to play the central role in efforts to bring about a more open trading system. These negotiations should consider dismantling nontariff barriers and other measures affecting the trade of developing countries. The Committee considered that it could usefully supplement these efforts by playing a more active part in strengthening governments’ resistance to protectionist pressures and encouraging trade liberalization. Accordingly, it invited members to discuss in future meetings progress reached on improvements in trade opportunities, particularly for the developing countries. It also invited the Director-General of the GATT, at the Committee’s future meetings, to present his appraisal of progress in measures to strengthen the multilateral trading system and to liberalize trade affecting developing countries. The Committee urged the Bank and the Fund to continue their efforts to encourage an expanding and open world trading system. The Committee considered that, by keeping under review the linkages between trade and the promotion of development, it could provide continuing support to the work of the GATT and the UNCTAD, and thereby help ensure the coherence and consistency of actions in the international financial and trade fields.
H. Additional Lending for Energy
32. Another subject which engaged the Committee’s attention concerned the financing requirements for energy development. The documents prepared by the Bank brought into focus the large magnitudes of resources required for financing essential energy projects in a large number of developing countries. The search by the Bank for mobilizing additional funds for this sector has not borne fruit so far.
I. Executive Secretary
33. The Committee appointed Mr. Fritz Fischer to succeed the present Executive Secretary, Mr. Kastoft, with effect from July 1, 1984, and placed on record its appreciation of the services rendered by him.
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 in September 1983 and April 1984
Annex A. Members of the Committee
Willy De Clercq
Vice Prime Minister, Minister of Finance, and Minister of Foreign Trade
|Austria, Belgium, Hungary, Luxembourg, Turkey|
Minister of Economy, Finance and Budget
Luis Escobar Cerda
Minister of Finance
|Argentina, Bolivia, Chile, Paraguay, Peru, Uruguay|
Minister of Finance
|Denmark, Finland, Iceland, Norway, Sweden|
Minister of the Treasury
|Greece, Italy, Portugal|
Minister of Finance
|Burma, Fiji, Indonesia, Lao People’s Democratic Republic, Malaysia, Nepal, Singapore, Thailand, Viet Nam|
Ghulam Ishaq Khan2
Minister for Finance, Commerce
and Economic Coordination Pakistan
|Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Maldives, Oman, Pakistan, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates, Yemen Arab Republic|
Minister of Finance
|Afghanistan, Algeria, Ghana, Islamic Republic of Iran, Libya, Morocco, Tunisia, People’s Democratic Republic of Yemen|
|Australia, Korea, New Zealand, Papua New Guinea, Solomon Islands, Vanuatu, Western Samoa|
Minister of Economy and Finance
|Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Djibouti, Equatorial Guinea, Gabon, Guinea-Bissau, Ivory Coast, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, São Tomé and Principe, Senegal, Somalia, Togo, Zaïre|
Minister of Finance
|Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica, St. Lucia, St. Vincent|
|12.||The Right Honorable|
Nigel Lawson, M.P.
Chancellor of the Exchequer
Minister for Planning and Economic Affairs
|Botswana, Burundi, Ethiopia, The Gambia, Guinea, Kenya, Lesotho, Liberia, Malawi, Nigeria, Seychelles, Sierra Leone, Sudan, Swaziland, Tanzania, Trinidad and Tobago, Uganda, Zambia, Zimbabwe|
Pranab Kumar Mukherjee
Minister of Finance
|Bangladesh, Bhutan, India, Sri Lanka|
Donald T. Regan
Secretary of the Treasury
Minister of Finance
|Cyprus, Israel, Netherlands, Romania, Yugoslavia|
Jesus Silva Herzog
Secretary of Finance and Public Credit
|Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Spain, Suriname, Venezuela|
Minister of Finance
José Santos Taveras
|Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Philippines|
State Counsellor and Minister of Finance
Federal Minister for Economic Cooperation
|Federal Republic of Germany|
Annex B. Organizational and Administrative Aspects
1. The Committee on Reform of the International Monetary System and Related Issues (Committee of Twenty) in 1974 agreed that one of the important objectives of the Reform of the World Monetary and Economic Order should be the promotion of economic development and to this end the net flow of real resources to developing countries should be given positive encouragement. The Committee of Twenty, in its final report in June 1974, therefore recommended 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.
2. It was hoped that the Development Committee would be helpful in providing a focal point in the structure of economic cooperation for formation of a comprehensive overview of diverse international activities in the international area, for efficient and prompt consideration of development issues, and for coordination of international efforts to deal with problems of financing development. The Committee was expected to work in close association with the managements and the boards of the two institutions.
3. The Development Committee was accordingly established pursuant to Bank Governors Resolution 294, October 2, 1974, and Fund Governors Resolution 29-9, October 2, 1974. The parallel resolutions provided that the members of the Development Committee were to be governors of the Bank, governors of the Fund, ministers, or others of comparable rank. Each member government of the Bank or the Fund that appoints an executive director or group of members that elect an executive director was to appoint one member of the Committee (in all: 21 in the Bank and 22 now in the Fund) and up to seven associates. The members were to be appointed in turn for successive periods of two years by the members of the Bank and the members of the Fund.
4. 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, and Sir Richard King, Permanent Secretary of the Ministry of Overseas Development of the United Kingdom, was appointed Executive Secretary. Mr. Virata was re-elected as Chairman on September 27, 1978, at the eleventh meeting of the Committee. On expiry of Mr. Virata’s term, the Committee, at its fifteenth meeting held on October 2, 1980, in Washington, D.C., unanimously selected Mr. David Ibarra Muñoz, Secretary of Finance and Public Credit of Mexico, as Chairman, and appointed Mr. Hans E. Kastoft, as Executive Secretary. Mr. Ibarra resigned from the post of Chairman in March 1982, and the Development Committee at its eighteenth meeting in Helsinki in May 1982 selected Mr. Manuel Ulloa Elias, Prime Minister and Minister of Economy, Finance, and Commerce of Peru, as the new Chairman of the Committee. Mr. Ulloa completed his term in September 1982 when, following the elections of the Executive Directors of the Bank and the Fund at the Annual Meetings in Toronto, the Committee unanimously selected Mr. Ghulam Ishaq Khan, Minister for Finance, Commerce, Planning, and Coordination of Pakistan, as the new Chairman of the Committee.
5. Following the resignation of Mr. Hans E. Kastoft, Executive Secretary, the Committee at its twenty-third meeting held on April 13, 1984, appointed Mr. Fritz Fischer as its new Executive Secretary. Mr. Fischer assumed charge of his duties with effect from July 1, 1984.
6. The Boards of the Bank and the Fund are used as preparatory bodies for the work of the Development Committee. The mechanism of Task Forces, with a specific limited task and duration, is used by the Committee whenever a need is felt for an in-depth study of a particular subject. A Task Force on the problems of Nonconcessional Flows was established in 1980 and concluded its comprehensive work by presenting its Final Report to the Committee at its Helsinki meeting in May 1982. The Committee also approved the establishment of a new 18-member Task Force on Concessional Flows to carry forward and widen the continuing study of the problems affecting the volume and quality and effective use of concessional flows in the shorter and longer terms. It is expected to present its Final Report sometime during 1985.
7. The organizations listed below were official observers to the Development Committee during 1983-84. 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
International Fund for Agricultural Development
Islamic Development Bank
OPEC Fund for International Development
Organization for Economic Cooperation and Development
United Nations Development Program
United Nations Conference on Trade and Development
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 in September 1983 and April 1984
Meeting of September 26, 1983
1. Capital Flows to Developing Countries
(i) The World Bank Lending Program and Implications for the Bank’s Capital Requirements
(ii) Status of Concessional Resource Flows
2. Sub-Saharan Africa: Development Issues
3. Progress Reports
(i) Linkages between Trade and the Promotion of Development
(ii) Lending for Energy
(iii) Task Force on Concessional Flows
4. Annual Report
5. Other Business
B. Press Communiqué (text published in Summary Proceedings, 1983, pages 280–82).
Meeting of April 13, 1984
1. Status of IDA
2. Linkages between Trade and the Promotion of Development
3. Status Reports
(a) Selective Capital Increase (IBRD)
(b) IFC Capital Increase
(c) Investment Incentives and Performance Requirements
4. Appointment of Executive Secretary
5. Other Business
B. Press Communiqué
1. The twenty-third meeting of the Development Committee was held in Washington, D.C. on April 13, 1984 under the chairmanship of His Excellency Ghulam Ishaq Khan, Minister of Finance, Commerce and Economic Coordination of Pakistan. Mr. A.W. Clausen, President of the World Bank, Mr. J. de Larosière, Managing Director of the International Monetary Fund, and Mr. Hans E. Kastoft, Executive Secretary, participated in the meeting. Representatives from a number of international and regional organizations and Switzerland also attended.
2. The Committee discussed the status of IDA and the linkages between trade and development against the background of the world economic outlook as projected in the Fund document and the report by the President of the World Bank. It was noted that while the world economic situation is more promising than a year ago, the achievement of sustained growth and its extension to developing countries require improved policy performance by both the developed and developing countries, an increase of private and official capital flows, and improved trade prospects.
3. Ministers recalled that at their last meeting most members had agreed on a Selective Capital Increase (SCI) for the World Bank of about $8 billion. In the process of negotiating the SCI, agreement was reached on the relative contributions of major donors to ID A-VII. The Committee noted the agreement reached among most of the major shareholders on share ranking in the IBRD which had facilitated the agreement on the IDA-VII Replenishment. While concern was expressed by members that action on IDA-VII and the SCI had not yet been taken, they were encouraged by the willingness of major shareholders to work toward resolving as quickly as possible the outstanding issues. Ministers urged that shareholders exert maximum effort to obtain the necessary approvals so that the implementing resolutions for the Seventh Replenishment and the Selective Capital Increase could be considered by the Executive Boards and approved by the Governors in time to permit the legislative action needed if ID A-VII is to become effective on July 1, 1984.
4. All donors but one expressed concern at the implications of a $9 billion replenishment, an amount well below the $12 billion level supported by most. All members except one pointed to the inadequacy of the $9 billion replenishment, which represents a sharp decline in real terms in relation to ID A-VI. Most members asked for accelerated action by IDA management and donors to mobilize up to $3 billion in a Supplementary Funding Arrangement to be available by July 1, 1984. All donors were urged to participate in this fund on the basis of fair burden-sharing.
5. The Committee looks forward at its next meeting to suggestions from World Bank management concerning the future role of the Bank and the implications for longer-term capital requirements, keeping in mind the need for a general capital increase. The Committee welcomed progress in the preparation of an expanded investment program for the International Finance Corporation (IFC) through a management proposal of a $750 million capital increase and called for early action by the IFC Executive Board.
6. In reviewing the world economic outlook, the Committee took note of the difficulties developing countries continued to experience despite recovery in many industrialized countries. The Committee welcomed the recovery of economic activity that is currently under way in industrial countries at a pace faster than was foreseen. It noted, however, that the effects of this recovery on employment had so far been limited outside the United States and Canada. The reductions in inflation rates which had been substantial in many countries were welcomed. The Committee expressed great concern, however, at the possible consequences of recent increases of key interest rates rising from an already high level. In reviewing economic conditions in the developing countries, the Committee commented favorably on the fact that the rate of growth appears to be picking up in these countries on average, but regarded the continuing low level of that rate, especially in per capita terms, as a danger and a challenge to policy. It was a matter of regret that, in general, little improvement in inflation rates had yet taken place.
7. The Committee paid special attention to the critical situation faced by the sub-Saharan African countries. The Committee expressed concern at the grim prospects for the region, reflected in a continued decline in per capita incomes for many African countries, a weakening in external payments positions, depressed commodity prices, a burdensome debt situation and against rapidly rising population growth, a crisis in food production, bordering on famine. These negative features had been exacerbated by continuing severe drought conditions which had now extended to southern Africa, creating human and economic problems of major proportions. It was agreed that increased concessional assistance was urgently needed from both bilateral and multilateral sources to address the immediate problem of food availability and its distribution and to support domestic policies aimed at improving sub-Saharan Africa’s long-term development prospects.
8. The Development Committee reiterated its earlier view that Africa should continue to receive high priority in the allocation of IDA resources. It was noted, however, that with a replenishment level of $9 billion, it would be difficult to provide adequate IDA resources to sub-Saharan Africa, taking into account the needs of other low-income countries. The Committee welcomed an undertaking by the Bank/IDA management to prepare a program for Africa for the September 1984 meeting of the Development Committee to guide the Bank and the international community in helping sub-Saharan Africa deal with its severe human, social, and economic problems.
9. The Committee held an extensive discussion on the linkages between trade, finance and development, on the basis of background papers prepared by the Bank and Fund staffs. While the Committee noted with satisfaction that exports had begun to revive, it expressed serious concern regarding the continuing rise in protectionism which is making more difficult the orderly implementation of the adjustment process in all countries, developing and developed. Moreover, for some heavily indebted developing countries relying on the openness of markets, protectionism has aggravated their serious balance of payments problems, making it more difficult for them to service their debt in an orderly fashion. The increase in trade barriers is also retarding the much needed structural adjustment in both developed and developing countries. The Committee emphasized that expanded trade opportunities, including more remunerative prices for primary commodities, would provide a critical impetus to the extension of world economic recovery and contribute to restoring the long-term growth and development prospects of developing countries. Trade liberalization and improved domestic economic policies in all countries, together with enlarged flows of external finance to developing countries, are mutually reinforcing actions which would help accelerate growth momentum of developing countries.
10. The Committee invited all governments to step up their efforts to seek effective solutions to the current problems in international trade relations, bearing in mind the special needs of the developing countries. The Committee welcomed the indications of a growing interest among governments in launching a new round of multilateral trade negotiations under the aegis of the GATT, which should continue to play the central role in efforts to bring about a more open trading system. These negotiations should consider dismantling nontariff barriers and other measures affecting the trade of developing countries. The Committee considered that it could usefully supplement these efforts by playing a more active part in strengthening governments’ resistance to protectionist pressures and encouraging trade liberalization. Accordingly, it invited members to discuss in future meetings progress reached on improvements in trade opportunities, particularly for the developing countries. It also invited the Director-General of the GATT, at the Committee’s future meetings, to present his appraisal of progress in measures to strengthen the multilateral trading system and to liberalize trade affecting developing countries. The Committee urged the Bank and the Fund to continue their efforts to encourage an expanding and open world trading system. The Committee considered that, by keeping under review the linkages between trade and the promotion of development, it could provide continuing support to the work of the GATT and the UNCTAD, and thereby help ensure the coherence and consistency of actions in the international financial and trade fields.
11. The Committee expressed its satisfaction with the progress achieved so far by the international community in addressing the debt problem of developing countries. The Committee requested that the Fund and the Bank continue to examine the debt problem of developing countries.
12. The Committee also took note of a study on investment incentives and performance requirements undertaken by the World Bank on the recommendation of the Task Force on Private Foreign Investment. The study will facilitate a better understanding of the impact and choice of policies pertaining to international direct private investment.
13. The Committee appointed Mr. Fritz Fischer to succeed the present Executive Secretary, Mr. Kastoft, with effect from July 1, 1984, and placed on record its appreciation of the services rendered by him.
14. The Committee agreed to meet again on September 23, 1984 in Washington, D.C.
Report I and the Resolutions contained therein were adopted by the Boards of Governors of the Fund and of the Bank, IFC and IDA, in Joint Session, on September 24, 1984.
Resolution No. 39-4; see pages 281–83.
Resolution No. 399 of the Bank.
Report II and the Resolutions contained 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 27, 1984.
See pages 30–34.
Resolution No. 39-5; see page 283.
Resolution No. 39-6; see page 284.
The candidacy of Muhammad Al-Atrash was withdrawn prior to the election.
Egypt, Democratic Kampuchea, and South Africa did not participate in this election.
Report III dealt with the business of the Boards of Governors of the Bank, IFC and IDA. Report IV and the recommendations contained therein were adopted by the Boards of Governors of the Fund and of the Bank, IFC and IDA, in Joint Session, on September 27, 1984
Mr. Usamah J. Faquih, Deputy Minister of Finance for International Development Cooperation, Saudi Arabia, served as Alternate Member to permit His Excellency Ghulam Ishaq Khan to serve as Chairman.