Reports of the Joint Procedures Committee
- International Monetary Fund. Secretary's Department
- Published Date:
- November 1982
|Reporting Member||Ivory Coast|
Other Members: Bahamas, Canada, Chile, Colombia, Denmark, France, Federal Republic of Germany, India, Japan, Kenya, Malawi, Panama, Papua New Guinea, Romania, Saudi Arabia, United Kingdom, United States, People’s Democratic Republic of Yemen
September 9, 1982
At the meeting of the Joint Procedures Committee held on September 8, 1982, 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. 1982 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. 1982 Regular Election of Executive Directors
The Committee noted that the 1982 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 1984.
4. Financial Statements, Report on Audit, and Administrative Budget
The Committee considered the Report on Audit for the financial year ended April 30, 1982, the Financial Statements contained therein (Fund Document No. 7 and Appendix VIII of the 1982 Annual Report), and the Administrative Budget for the financial year ending April 30, 1983 (Fund Document No. 9 and Appendix VI of the 1982 Annual Report).
The Committee recommends that the Board of Governors of the Fund adopt the draft resolution set forth in Fund Document No. 8.3
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 6, 1982, reproduced as Fund Document No. 10, 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. 10.4
|/s/ Abdlatif Y. Al-Hamad||/s/ Abdoulaye Koné|
|Kuwait—Chairman||Ivory Coast—Reporting Member|
Annex I to Report I
Regulations for the Conduct of the 1982 Regular Election of Executive Directors of the Fund
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 a 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 1982 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 1982 Annual Meeting to be held Tuesday, September 7, 1982.
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(6)(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 per cent,” and in paragraphs 3, 4, and 5, “nine per cent,” 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, signed by the Governor, shall be deposited in the ballot box.
(c) When a ballot has been completed, the Chairman shall cause the ballots to be counted and shall announce the names of the persons elected promptly after the tellers have completed their tally of the ballots. 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(i)(iii), towards 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 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.
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 per cent 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 per cent 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 per cent 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 per cent.
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 towards his election.
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, 1982.
16. Effective Date of Election of Executive Directors: The effective date of election shall be November 1, 1982, 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, 1982.
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. 37-6, August 16, 1982
Statement of Results of Elections, September 7, 1982
|Candidate Elected||Members Whose Votes Counted Toward Election5||Number of Votes|
|Central African Republic||490|
|São Tomé and Principe||280|
|Jacques de Groóte||Austria||5,200|
|Syrian Arab Republic||1,195|
|United Arab Emirates||2,276|
|Yemen Arab Republic||445|
|Yemen, People’s Democratic Republic of||865|
|Robert K. Joyce||Antigua and Barbuda||286|
|Trinidad and Tobago||1,480|
|Lao People’s Dem. Rep.||490|
|R. N. Malhotra||Bangladesh||2,530|
|A. R. G. Prowse||Australia||12,100|
|Papua New Guinea||700|
|Miguel Senior||Costa Rica||865|
|/s/ Tomás F. Ó Cofaigh||/s/ Jong-Suk Park|
Annex II to Report I
September 6, 1982
Dear Mr. Chairman:
In accordance with Section 16 of the By-Laws, the attached amendments of the Rules and Regulations adopted since the 1981 regular meeting are submitted for review by the Board of Governors.
On February 24, 1982, the Executive Board adopted a decision to amend Rule G-4 to avoid the possibility that a purchasing member might receive on the same day amounts of a currency based on two different exchange rates against the SDR, and also to minimize the extent to which the Fund might be exposed to an exchange risk in connection with temporary investment of borrowed resources.
Rule G-4(b) was amended to eliminate the second sentence. The intent of this sentence was to avoid exchange risks on purchases being financed from borrowed resources held in investments in the Borrowed Resources Suspense Account. It was expected that these resources would be placed on deposit to mature on dates when they would be needed to finance a purchase, i.e., normally on the 15th or the last day of the month. Exchange risks would arise in these operations because of the practice in the exchange markets for transactions to take place for value on the second business day after the exchange rate is established, and the currency equivalent of a maturing deposit denominated in terms of the SDR is determined in this way. The Fund, however, normally operates on the basis of three business days. Thus, an exception to the normal three days was originally thought to be necessary, and, effective May 1, 1981, Rule G-4 was amended to provide for the exception.
As a consequence, however, of valuing disbursements of maturing investments on a two-day basis and other funds on a three- or four-day basis in accordance with the relevant decision, a purchasing member could have been put into a position under which it received two amounts of the same currency for the same value date but with the amounts valued at different exchange rates against the SDR. It has since become clear that it is possible to avoid such differences in SDR value for the purchasing member without exposing the Fund to exchange risks, and the deletion of the second sentence in Rule G-4(b) has resulted in the exchange rate for a purchase involving resources borrowed under the policy of enlarged access being determined in the same manner as for all other transactions and operations in the General Resources Account, namely, on the basis of exchange rates on the third business day prior to the value date.
Rule G-4(c) was amended so as to make it clear that the schedule established for repurchases under that subparagraph is applicable only to purchases financed by resources borrowed by the Fund under borrowing arrangements for enlarged access, and not to purchases financed by other forms of borrowing. This was the intention at the time the Rule was adopted, but it was not made explicit. This gave rise to confusion because the limited applicability could only be fully understood by reference to the relevant staff memorandum and to another Executive Board decision.
On April 23, 1982 the Executive Board decided to amend Rule I-2 to require payment of charges owed to the Fund pursuant to Article V, Section 8(b) or (c) on the third business day following the dispatch of notification by the Fund to the member. Rule I-2 had provided that charges should be paid “promptly” after the receipt of the notification from the Fund, but the Rule was not precise as to the meaning of “promptly.” It is generally desirable for a member to know clearly and unambiguously the exact day when a payment becomes due. It is essential to be precise on this point in cases where the approval of a purchase is dependent upon the member not being in arrears to the Fund. Most members that have used the Fund’s resources have given the Fund a standing authorization to debit their SDR holdings automatically for charges due, which debit is made on the third business day after dispatch of the notification by the Fund. Other members, who have not given the Fund this authority, were asked to settle on the same day as the rest of the members. The amendment to Rule I-2 formalized the existing practice as it applied to the prompt payment of charges.
In its discussion of the Fund’s income position for financial years 1982 and 1983, the Executive Board concluded that it would be prudent to place in the special reserve income earned during financial year 1982, so as to contribute to the objective of the formation of a three per cent increase in reserves for the subsequent year with a portion set aside to cover, as needed, part of the deficit estimated for 1983. The amendment of Rule I-6(4)(a) and addition of I-6(4)(d), approved on June 9, 1982, were required to enable the Board to seek to attain these objectives.
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 1982 Annual Meeting International Monetary Fund
Attachment 1. Rules and Regulations Amended Since the 1981 Annual Meeting
1. Rule G-4(b) and (c). Text as amended February 24, 1982.
(b) The value date for purchases involving resources borrowed by the Fund under the policy on enlarged access will normally be either the 15th or the last day of the month, or the next business day thereafter if the day selected is not a business day. If requests for purchases are not received in the Fund in time for its instructions to be issued for these value dates in accordance with (a) above, the purchases will be executed at the next value date.
(c) Repurchases in respect of a purchase financed with resources borrowed under the policy on enlarged access should be made normally with a value date of either the 6th day or 22nd day of the month, or the next business day if the day selected is not a business day, provided that repurchase will be completed not later than seven years from the date of the purchase.
2. Rule I-2. Text as amended April 23, 1982.
The Fund shall notify each member by cable, as soon as possible after July 31, October 31, January 31, and April 30, of the charges it owes to the Fund pursuant to Article V, Section 8(b)or (c) for the three calendar months ending on each such date, except that in respect of charges pursuant to Rule I-6(3), (5), and (10), the notifications shall be sent as soon as possible after June 30 and December 31, and shall relate to the six calendar months ending on each such date. The charges shall be payable on the third business day following the dispatch of the notification.
3. Rule I-6(4)(a) and (d). Text of I-6(4)(a) as amended June 9, 1982; text of I-6(4)(d) as adopted June 9, 1982.
(a) The rate of charge shall be determined at the beginning of each financial year on the basis of the estimated income and expense of the Fund during the year and the target amount of net income for the year. The latter shall be 3 per cent of the Fund’s reserves at the beginning of the year or such other percentage as the Executive Board may determine particularly in the light of the results in the previous financial year.
(d) If the Fund’s net income for a financial year is in excess of the target amount for that year, the Executive Board may for the purposes of the determinations and estimates referred to in (a) and (b) above in respect of the immediately subsequent financial year, decide to deem any part of the excess over the target amount that has been placed to reserve as income for that subsequent financial year.
September 9, 1982
The Joint Procedures Committee met on September 8, 1982 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 Fund and the Bank 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 1982–83
The Committee recommends that the Governor for Spain be Chairman, and the Governors for Bangladesh and Paraguay 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: Argentina, Bangladesh, Belgium, Benin, China, Costa Rica, France, the Federal Republic of Germany, Haiti, Japan, Malaysia, Niger, Pakistan, Paraguay, Saudi Arabia, Spain, Tunisia, Uganda, United Arab Emirates, United Kingdom, United States, and Yugoslavia.
It is recommended that the Chairman of the Joint Procedures Committee shall be the Governor for Spain, and the Vice Chairmen shall be the Governors for Bangladesh and Paraguay, and that the Governor for France shall serve as Reporting Member.
|/S/ Abdlatif Y. Al-Hamad||/S/ Abdoulaye Koné|
|Kuwait—Chairman||Ivory Coast—Reporting Member|
Annex to Report III
September 5, 1982
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 1981–June 1982. 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.
Manuel Ulloa Elías
Chairman Development Committee
Abdlatif Y. Al-Hamad
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 1981–June 1982)
1. This is the eighth 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 1981 to June 1982.
2. 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. It therefore recommended that appropriate arrangements be made to achieve this objective. The Boards of Governors of the Bank and the Fund accordingly established the Development Committee in September 1974 to maintain an overview of the development process and to carry forward the study of the broad question of the transfer of real resources to developing countries, including measures to implement its conclusions. The Committee was established at ministerial level and 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 for efficient and prompt consideration of development issues and for coordination of the international efforts to deal with problems of financing development.
3. On the background of analyses and projections of the IBRD’s World Development Report, the IMF’s World Economic Outlook and other studies specially prepared, the Committee during the year under review considered a number of development issues and matters relating to the improvement in capital flows to, and their efficient use in, developing countries. The status of lending operations of multilateral development institutions (MDIs) in the changed circumstances of the 1980s constituted an important element in the Committee’s work. The attention of Finance and Development Ministers, representing developed, OPEC, and developing countries, was focused on important development issues of mutual interest in an effort to promote international consensus and to facilitate decisions in appropriate bodies at national and international levels.
4. The Committee held two meetings during the year. The first meeting was in Washington on September 27-28, 1981, at the time of the Annual Meetings of the Boards of Governors of the Bank and Fund. It was chaired by H.E. Manuel Ulloa Elías, Prime Minister and Minister of Economy, Finance and Commerce of Peru, in the absence of the Committee’s Chairman, H.E. David Ibarra Muñoz, Secretary of Finance and Public Credit of Mexico, who was unable to attend the meeting. The second meeting of the year—the eighteenth in the series—was held in Helsinki, Finland on May 13-14, 1982. As H.E. David Ibarra Muñoz had earlier resigned from the post of Chairman, the Committee at its meeting in Helsinki unanimously selected H.E. Manuel Ulloa Elías as the new Chairman of the Committee.
5. At the technical and preparatory level, the Task Force set up by the Committee for an in-depth study of conditions relating to non-concessional capital flows to developing countries held a series of meetings during the year. It had a further free and extensive exchange of views on the subject with high level representatives of the international banking community before finalizing its report which was presented to the Committee at the Helsinki meeting.
6. The changes introduced in April 1979 to enhance the effectiveness of the Committee had made the organization of its work the joint responsibility of the Chairman of the Development Committee, the Managing Director of the International Monetary Fund, and the President of the World Bank assisted by the Executive Secretary. The reorganization also provided for a greater and closer involvement of the Executive Boards and the staffs of the Fund and the Bank. A further improvement was made by structuring the Committee’s discussions around broad topics rather than on a number of individual papers. The various papers prepared for the Committee now serve as background information against which discussion is focused on a small number of selected topics. This is accomplished through the preparation of an annotated agenda summarizing and highlighting the issues requiring ministerial attention. This approach makes the agenda more manageable and is found to be helpful particularly in the context of the time constraint somewhat inherent in meetings at ministerial level. These changes in the organization and procedure have helped, but the impression persists—with some justification—that the full potential of the Committee remains to be realized. The search for ways and means to further enhance the Committee’s effectiveness to attain its objectives continues to engage its attention.
7. The main thrust of the Committee’s work in the year under review has continued to be on capital flows to developing countries, both concessional and non-concessional, bilateral and multilateral. The status of lending operations for MDIs, their role in the changed circumstances of the 1980s, the IDA difficulties, additional lending for energy, increased cofinancing with public and private sectors, the serious economic situation in the sub-Saharan African countries, and the follow-up on the G-24 and Brandt Commission proposals are the important specific issues which received special attention.
II. Committee Consideration of Major Questions Affecting Resource Transfer
A. World Development Report and Economic Situation and Prospects Facing the Developing Countries in the 1980s
8. The IBRD’s World Development Report 1981 and the IMF’s World Economic Outlook were invaluable sources of background information for the Committee’s discussions on many current and urgent development issues. These documents showed that the world economic situation continues to be dominated by serious problems of slow or negative economic growth; reduced but still unacceptably high rates of inflation; near record high levels of unemployment with its mounting economic, social, and political significance bringing new trends of protectionism; stagnation in the volume of world trade resulting in particular in depressed commodity prices; high interest rates; and large imbalances on external account positions.
9. A factor of central importance contributing to the gloomy assessment has been the slowing of the average growth of real GNP in the industrial countries from an annual rate of 4 per cent in the period 1976-79 to only 1.3 per cent in 1980 and 1.2 per cent in 1981. The persistent low level of economic activity in the industrial countries has had a profound effect on the performance of the non-oil developing countries. Their growth rates, already unsatisfactory for the majority of them, are now markedly below the corresponding rates of the late 1960s and early 1970s and very modest in relation to developmental needs against a background of high population growth. In recent years the current account positions of most non-oil developing countries have been sharply affected by external developments—notably high energy costs, inflation, and high interest rates in international markets and the pervasive slowdown of economic activity. Thus, the combined current account deficit of the non-oil developing countries in 1982 was projected to remain at a level of around $100 billion for the third year running as compared with $39 billion in 1978.
10. The IBRD World Development Report 1981 presents two growth scenarios for various parts of the global economy for the decade of the eighties. According to the high-case scenario, per capita incomes in the middle-income oil importing developing countries could grow at 3.4 per cent annually, the low-income countries at 1.8 per cent. For this scenario to be realized there would need to be a recovery in the rate of growth in industrial economies, a reduction in interest rates, an expansion in world trade, and an increase in the flow of concessional assistance. On the assumption of the low case, the ratios of growth are 2.1 and 0.7 per cent, respectively.
11. In the light of this world economic situation and prospects, the Committee expressed its deep concern that most developing countries, especially the low-income countries, continue to face grave economic problems with poor medium-term prospects. They continue to contend with a difficult external economic environment. The Committee therefore found that efforts by industrial nations to further curb inflation and reduce unemployment and restore their growth rates while at the same time intensifying the pursuit of liberal trade regimes should be encouraged. The Committee reiterated that in a world of tightening interdependence there is a need for the economically more important countries to take into account the effects of their economic policies on other countries.
12. The Committee stressed the importance of efforts by all countries to pursue appropriate adjustment policies and encourage developed countries, capital surplus oil exporting countries, as well as advanced developing countries, to support adjustment and development through technical assistance and financial efforts. The Committee reiterated the need for measures to increase the flow of official development assistance (ODA) to the oil importing developing countries, especially the low-income countries.
B. Concessional Flows
(i) ODA Flows
13. The Committee noted with concern that the situation and prospects for the poorest developing countries are particularly bleak as they face stagnation, in some cases retrogression, in the period ahead. While it was important that the developing countries review their domestic policies and programs if their development objectives were to be achieved, it should at the same time be recognized that they would also need additional outside assistance. For these countries to be able to move along the high growth road projected in the World Development Report, that report estimates that as much as $66 billion from all sources of concessional assistance in 1990, as against $22 billion in 1980, might be necessary. This tripling in the quantum of concessional flows in nominal terms is equivalent to a rate of growth of only 11.7 per cent per annum, much less than the 18.1 per cent rate increase achieved in 1970-80. The report’s projections of concessional flows in 1990 will still mean only 0.37 per cent of GNP transferred by the OECD countries. Of the $66 billion, it is estimated that half would have to flow to the low-income countries. It is to be remembered that net capital receipts of the low-income oil importers did not increase at all after 1975 in real terms. Real ODA receipts by this group of countries in 1978 and 1980 were, in fact, lower than the level reached in 1975. There was no increase in the flow of commercial loans either. Thus, poorer countries have received no additional support from the international community even to deal with their terms of trade losses in 1979-80. In the circumstances, urgent measures to reduce strains on their economies are required, including improving the flow of concessional assistance. In this connection, the Committee recalled the Ottawa Communiqué which acknowledged the decisive importance of the developing countries’ own efforts, recorded the commitment of participating industrial countries to maintain substantial and, in many cases, growing levels of official development assistance and to seek to increase public understanding of its importance.
14. At its September 1981 meeting, the Committee welcomed the coming into force of IDA-6. As it is the single most important source of concessional assistance to the poorer developing countries, the Committee urged all contributors to resolve outstanding issues so that planned commitment levels could be maintained. The Committee further requested the World Bank to initiate preparatory discussions for the next IDA Replenishment as soon as possible.
15. Reductions in IDA’s commitment authority under the Sixth Replenishment will certainly have a serious impact on the economies of poorer developing countries, for whom concessional assistance is a major source of external support. A hiatus or reduction in the availability of IDA credits would disrupt the momentum behind development efforts and programs so assiduously built up through sustained efforts over several years. The Committee therefore felt that it was important and necessary to resolve the crisis now faced by IDA and to take steps to address the problems in FY82 and FY83 and beyond. In this connection, the Committee welcomed the action taken by some donors to release, irrespective of the pro rata principle,2 the full amount of the second tranche of their contribution to IDA-6. It noted the importance attached by a number of donors to finding ways of reducing current and prospective shortfalls of IDA’s commitment authority in the years FY82-84. Several ways, including waiving or relaxing the pro rata provisions of the IDA resolution, as well as the creation of a Special Fund which would provide additional resources, have been proposed. The Committee welcomed the progress made in considering these alternatives in informal meetings held by donor representatives during the week preceding the Helsinki meeting in order to develop specific action programs which could be quickly translated into operational mechanisms so that originally planned commitment levels could be maintained to the maximum extent possible. The Committee also emphasized that discussions should proceed apace so that the Seventh Replenishment of IDA could begin, if possible, as scheduled in FY84.
(iii) Task Force on Concessional Flows
16. In the critically important area of concessional flows, the other significant decision arrived at by the Committee relates to the establishment of a special Task Force. The decision, in principle, to establish such a Task Force was taken at the Gabon meeting on May 22, 1981 in order to carry forward and widen the continuing study of the problems affecting the volume and quality and the effective use of concessional flows in the shorter and longer terms. In pursuance of this decision and directive of the Committee, the Executive Secretary, at the request of the Chairman of the Committee, had undertaken extensive consultations. The Committee welcomed the successful outcome of these consultations on the terms of reference of the Task Force, its composition and its chairman. The Committee’s approval will now enable the 18-member Task Force on Concessional Flows, representing industrial donor countries, OPEC and developing countries, to undertake in the period ahead its important task under the chairmanship of John P. Lewis, Professor at Princeton University and former Chairman of the Development Assistance Committee of OECD.
C. Non-Concessional Flows
Final Report of the Task Force on Non-Concessional Flows
17. Non-concessional flows was the subject of an in-depth study by a Task Force set up by the Committee in 1980. This was done in the knowledge that the official financial flows alone could not possibly meet the large and increasing need for funds required by developing countries facing extraordinarily large balance of payments deficits. The Task Force, after agreeing on an intensive program of work, held a series of meetings over the past two years. It also consulted extensively with international bankers and drew upon the work of IMF and World Bank staff. The successful completion of its mandate is reflected in its final report submitted to the Committee at its Helsinki meeting.
18. The topics relating to developing countries covered by the final report include the pattern of financing; external debt management; the role and objectives of debt restructuring; possible structural constraints on international bank lending; access to international bond markets; the role of official bank supervision in respect of continuity of market financing flows; the impact of inflation and interest rates on the economies of the developing countries and their creditworthiness; and the role of adjustment policies in promoting financing from capital markets.
19. The Task Force considered that an essential condition for meeting the external financing needs of oil importing developing countries is that non-concessional flows continue to be available to them in conjunction with private direct investment and concessional and part-concessional flows.
20. As regards future action, the report of the Task Force recommends a number of measures that could be taken by the World Bank and other MDIs [multilateral development institutions] with a view to stimulating additionality in the flows of non-concessional resources to developing countries. It recommends that this may be accomplished through:
(i) examining possibilities of increasing the future lending capacity of the World Bank and other MDIs through (a) increases in their capital with smaller—or no—paid-in element; or (b) through carefully managed changes in their statutory lending limits;
(ii) giving higher priority to commercial cofinancing through a variety of new mechanisms and techniques;
(iii) a resumption of portfolio sales when market conditions permit, and subject to prior approval of the countries whose loans are being sold; and
(iv) examining the feasibility of introducing various techniques such as the role of Partially-Guaranteed Loan Pass-Through Certificates and the provision of partial guarantees in respect of commercial loans to developing countries.
21. The Committee expressed its appreciation to the Task Force on its useful report and it noted its final conclusions and recommendations. It asked the Executive Directors of the World Bank and the regional banks to consider the recommendations of the Task Force taking into account their legal and procedural implications and report their deliberations to the Committee in due course. The Committee also considered it desirable that appropriate arrangements be made to periodically review further developments in the field of non-concessional flows.
22. In view of the general interest in this subject, the Committee also decided to make the report of the Task Force on Non-Concessional Flows available to the public.
D. Status of Lending Operations of Multilateral Development Institutions and Their Role in the 1980s
23. The lending operations of the World Bank and other multilateral development institutions and their future role in the changed circumstances of the 1980s was another important subject which engaged the Committee’s attention during the year under review. There was general recognition that the strengthening of the MDIs had become necessary to supplement the flows of private capital to the developing countries to help them meet their increased financing needs and to support their internal structural adjustment policies and programs.
24. The size of the World Bank’s borrowing program for the next several years, the rising cost of borrowing, and the erosion of the long-term and fixed-rate markets have raised a number of major issues regarding the level and rate of Bank lending in the period ahead. Either an expansion of Bank lending over previously planned levels or the absorption of new demands—mostly the lending program for new members and energy—within the previously planned levels pose problems. The Committee, bearing in mind budgetary constraint considerations, urged governments to accelerate their subscriptions to the $40 billion General Capital Increase of the Bank and to release the local currency of these subscriptions as rapidly as possible. The Committee also took note of the ongoing discussions concerning the Bank’s borrowing practices and its lending rate policy and urged the Executive Directors of the Bank to reach prompt decisions on these matters in order to enhance the Bank’s funding flexibility both as a means of keeping the cost of Bank borrowing as low as possible and of assuring that planned growth in lending can be financed on reasonable terms. It also requested the Executive Directors to continue their study of the scope for an expansion, in real terms, of World Bank lending.
25. The Committee, on the basis of the material provided by the regional banks, also took note of their resource needs and urged member governments speedily to seek means of financing the future capital requirements of the regional banks’ ordinary and concessional funds at an appropriate level besides completing commitments previously entered into. The Committee also expressed its full support of the regional banks in their efforts to serve as catalysts and seek expansion in their co-financing programs.
E. Additional Lending for Energy
26. The Committee’s discussion of energy reflected the global nature of the problem and the international community’s interest in a general approach to the subject encompassing conservation and the development of both conventional and nonconventional sources of energy.
27. This new emphasis on energy development is reflected in the expansion of the Bank’s energy lending program from $1.1 billion in FY77 to $2.4 billion in FY81 while the FY82 program is likely to amount to $3.25 billion. This acceleration was accomplished by increasing the percentage of total Bank lending to energy from 15 per cent in FY77 to 25 per cent in FY82.
28. However, this percentage cannot be increased or even sustained without cutting into other priority sectors. It was feared that without additional funds the remainder of the expanded program of the Bank will not be achieved.
29. In the circumstances the Committee, while noting with satisfaction that the Bank’s lending program for energy has expanded rapidly, asked the Executive Directors of the World Bank further to explore ways which would permit the Bank to prepare and secure financing for an increased program of energy investments including an Energy Affiliate or a Special Fund or agreed cofinancing arrangements. The Committee desired to receive a progress report in this regard at its September 1982 meeting.
30. In view of IBRD’s and IDA’s possible immediate and longer-term resource constraints, the World Bank Group is giving renewed emphasis to the need to supplement its funding of projects with cofinancing from three other main sources. These are bilateral and other multilateral concessionary funds; official export credits; and commercial bank lending.
31. The Committee noted with satisfaction the sizable expansion achieved by the World Bank in cofinancing. The Bank is currently engaged in evaluating a broad array of new cofinancing techniques and developing a range of cofinancing instruments. The Committee endorsed the efforts of the IBRD and IDA to secure an increase in cofinancing from all sources on terms suitable for, and acceptable to, the borrowers and asked the Executive Directors of the Bank to consider the various proposals on cofinancing which they will be discussing in the period ahead and to report on them, if possible, to the September 1982 meeting of the Committee.
G. Program of Action for Sub-Saharan Africa
32. The study entitled, Accelerated Development in Sub-Saharan Africa: An Agenda for Action, prepared by the World Bank at the request of the African Governors, was the subject of great interest in the Development Committee both for its diagnosis of the current economic crisis in sub-Saharan Africa and for its policy suggestions. The Committee noted with deep concern the revelation in the report that in the preceding two decades output per person rose more slowly in sub-Saharan Africa than in any other part of the world and growth prospects for the 1980s were dismal since, except under optimistic assumptions, per capita incomes are projected to decline for this part of the continent which already accounts for 20 of the 31 least developed countries. The potential for growth, however, exists and can be realized through increased flows of resources to the region, a substantial improvement in their world trading opportunities, and through appropriate adjustments in domestic economic policies and in the efficiency with which resources are used. This will require attention and resources from the international community in forms suited to African development needs.
33. The report was considered to provide a good basis for a dialogue between the African governments, the international donor community, and the multilateral financial institutions. The Committee urged the World Bank to take the lead in carrying forward this dialogue with a view to promoting joint action by African governments, donors, and international agencies in order to accelerate growth and development through effective financial and technical assistance, appropriate policy changes, and expanded investment programs.
34. At its Helsinki meeting, the Committee had before it the Dakar Memorandum of March 3, 1982, drawn up by the African Governors of the World Bank as well as a report on the Bank’s further discussions with OPEC aid agencies, bilateral donors, and the African Development Bank. The main focus of this information was on the policy and financial issues facing the sub-Saharan countries. The Committee urged the World Bank to move expeditiously to assist the sub-Saharan African countries to formulate specific programs of action and, taking account of the Dakar Memorandum, to continue its dialogue with donor countries in order to enhance the flow of aid in real terms necessary to support such programs of action.
H. Private Foreign Investment
35. The Committee noted that the World Bank has now completed its plan to study the quantitative and qualitative impact of both foreign investment incentives and performance requirements on direct investment and trade patterns, and it encouraged the World Bank to complete the study for its consideration.
I. G-24 Program of Immediate Action and Brandt Commission Report
36. The recommendations contained in the report of the Brandt Commission and in the G-24’s Program of Immediate Action have received considerable attention by the Committee over the past two years. As a background to these discussions, the staff of the Fund and the Bank had prepared and submitted to the Committee a number of documents analyzing the recommendations. The Committee welcomed the active consideration given by the Fund and the Bank to the recommendations with regard to measures to enhance the flow of resources to developing countries and stressed that the Brandt Commission proposals on reduction of poverty should receive special attention. The Committee noted that both the Fund and the Bank had considered, and in some cases implemented, the recommendations in question and encouraged the two institutions to continue to pay due regard to these recommendations. The Committee has now asked the two institutions to present to the September 1982 meeting of the Committee reviews of the status of implementation of the recommendations which are of particular relevance to the Committee’s work.
III. Performance Review
37. The parallel Resolutions of the Boards of Governors of the Bank and the Fund establishing the Committee had provided for a review of its performance on the basis of which they were to take such action as they deemed appropriate.
38. The Committee carried out two such reviews in 1978 and 1981. The reviews comprised an examination of the Committee’s mandate, its structure, its work methods, and the limitations which it faced in its operations. The Committee reaffirmed the importance, the usefulness, and the potential of this ministerial forum. It concluded that the objective for which the Committee was established is still valid and the need for such a high-level political forum is probably greater now than when the Committee was established in 1974. Suggestions or proposals to further enhance the effectiveness of the Committee can be examined at any time on the Committee’s initiative in the light of experience gained or changed circumstances. The Boards of Governors, taking into account the views and recommendations of the Executive Boards of the Bank and the Fund and the Development Committee, concluded that the review of the performance of the Committee, as required by the relevant parallel Resolutions, had been completed.
IV. Future Tasks
39. The Annual Report briefly describes some of the basic problems which currently confront the economies of both the developed and developing countries. The periodic review of financial and development issues such as the volume, quality, and effective use of financial flows to the developing countries, both bilateral and multilateral, concessional and non-concessional, will remain the major responsibility and concern of the Committee in the period ahead. The problems are complex, solutions are not easy, and consensus has yet to be reached. This much, however, is clear, that neither domestic policies of developing countries nor external assistance alone can do the job. Both have to be pursued and blended together to produce the right results.
40. The Development Committee, with its broad responsibilities, its compact size, and the support of two premier multilateral institutions in the fields of finance and development, continues to provide a representative ministerial forum which attempts to seek international consensus on a number of vital development issues and thereby facilitates decisions in appropriate bodies.
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 1981 and May 1982
Annex A: Members of the Committee
|1.||His Excellency||Saudi Arabia|
|Minister of Finance and National Economy|
|2.||His Excellency||Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Maldives, Pakistan, People’s Democratic Republic of Yemen, Qatar, Somalia, Syrian Arab Republic, United Arab Emirates, Yemen Arab Republic|
|Abdlatif Y. Al-Hamad|
|Minister of Finance and Planning|
|3.||The Honorable||Greece, Italy, Malta, Portugal|
|Minister of the Treasury|
|4.||His Excellency||Austria, Belgium, Luxembourg, Turkey|
|Willy De Clercq|
|Minister of Finance|
|Minister of Economy and Finance|
|6.||The Honorable||Brazil, Colombia, Dominican Republic, Ecuador, Guyana, Haiti, Panama, Suriname, Trinidad and Tobago|
|7.||The Honorable||Australia, Korea, New Zealand, Papua New Guinea, Philippines, Seychelles, Solomon Islands, Western Samoa|
|J. W. Howard, M.P.|
|8.||The Right Honorable||United Kingdom|
|Sir Geoffrey Howe, Q.C., M.P.|
|Chancellor of the Exchequer|
|9.||Her Excellency||Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, Venezuela|
|Minister of State, Chief of CORDIPLAN [Ministry for Planning and Coordination]|
|10.||His Excellency||Afghanistan, Algeria, Ghana, Iran, Morocco, Oman, Tunisia|
|Minister of Finance|
|11.||His Excellency||Benin, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Djibouti, Equatorial Guinea, Gabon, Guinea-Bissau, Ivory Coast, Madagascar, Mali, Mauritania, Mauritius, Niger, São Tomé and Principe, Senegal, Togo, Upper Volta, Zaïre|
|Minister of Economy, Finance and Planning|
|12.||The Honorable||Bahamas, Barbados, Canada, Dominica, Grenada, Ireland, Jamaica, St. Lucia, St. Vincent and the Grenadines|
|Allan J. MacEachen, P.C., M.P.|
|Deputy Prime Minister and Minister of Finance|
|13.||The Honorable||Bangladesh, India, Sri Lanka|
|Pranab Kumar Mukherjee|
|Minister of Finance|
|Federal Minister for Economic Cooperation|
|15.||His Excellency||Denmark, Finland, Iceland, Norway, Sweden|
|Minister of Finance|
|16.||The Honorable||United States|
|Donald T. Regan|
|Secretary of the Treasury|
|17.||The Honorable||Burma, Fiji, Indonesia, Lao People’s Democratic Republic, Malaysia, Nepal, Singapore, Thailand, Viet Nam|
|18.||His Excellency||Argentina, Bolivia, Chile, Paraguay, Peru, Uruguay|
|Manuel Ulloa Elías3|
|Prime Minister and Minister of Economy, Finance and Commerce|
|19.||His Excellency||Cyprus, Israel, Netherlands, Romania, Yugoslavia|
|A. P. J. M. M. van der Stee|
|Minister of Finance|
|Minister of Finance|
|Minister of Finance|
|22.||His Excellency||Botswana, Burundi, Ethiopia, The Gambia, Guinea, Kenya, Lesotho, Liberia, Malawi, Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe|
|Minister of Finance|
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 management 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 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 Elías, Prime Minister and Minister of Economy, Finance and Commerce of Peru, as the new Chairman of the Committee.
5. 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 Non-Concessional 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.
6. The organizations listed below were official observers to the Development Committee during 1981–82. 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
Organisation for Economic Cooperation and Development
United Nations Development Programme
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 1981 and May 1982
Meeting of September 27-28, 1981
1. World Development Situation and Prospects
2. Status of Lending Operations of the Multilateral Development Institutions
(ii) Regional Banks
3. Action Program for Sub-Saharan Africa
4. Follow-up on Outstanding Development Issues
5. Annual Report and Review of the Performance of the Development Committee
6. Other Business
(i) Study of Investment Incentives and Performance Criteria—Recommendation of Development Committee Task Force on Private Foreign Investment
(ii) Press Communiqué
(iii) Date of Next Meeting
B. Press Communiqué (text published in Summary Proceedings, 1981, pages 401–405).
Meeting of May 13-14, 1982
Selection of Chairman
* * *
1. Status of Lending Operations for Multilateral Development Institutions (MDIs)
(i) Status of IDA
(ii) IBRD Lending
(iii) Additional Lending for Energy
(iv) Regional Banks
2. Non-Concessional Flows and Cofinancing
(i) Final Report of the Task Force on Non-Concessional Flows
(ii) IBRD/IDA Cofinancing
3. Follow-up on Sub-Saharan African Action Program
4. Review of the Follow-up on the Brandt Commission and G-24 Recommendations
5. Progress Report on the Composition and Terms of Reference of the Task Force on Concessional Flows
6. Other Business
B. Press Communiqué
1. The Development Committee held its eighteenth meeting in Helsinki on May 13-14, 1982, under the chairmanship of H.E. Manuel Ulloa Elías, Prime Minister and Minister of Economy, Finance and Commerce of Peru, who, at the start of the meeting, was unanimously selected as the new Chairman in place of H.E. David Ibarra Muñoz, who had earlier resigned from this position. Mr. J. de Larosière, Managing Director of the International Monetary Fund, Mr. A.W. Clausen, President of the World Bank, and Mr. Hans E. Kastoft, Executive Secretary, participated in the meeting. Representatives from a number of international and regional organizations and Switzerland also attended the meeting.
2. The Committee deliberated at length on a few selected topics in its search for solutions to the many problems which currently plague the economies of both the developed and developing countries. The Committee noted with concern that the medium-term prospects for the world economy and particularly their impact on the developing countries continue to be unfavorable. The situation and prospects for the poorest developing countries are particularly bleak as they face stagnation, in some cases retrogression, in the period ahead. This situation calls for greater adjustment efforts to the new international environment on the part of both groups of countries in order to facilitate the resumption of sustainable growth. The Committee stressed the need for increased external capital flows on appropriate terms to the developing countries, especially to the least developed. There is also need for a reappraisal and strengthening of the role of the multilateral development institutions in order to enable them to maximize their contribution to the solution of the problems of the present crisis.
3. It was in this context that the Committee first addressed itself to a thorough review of the current status of lending operations of the multilateral development institutions and the difficulties which they face in replenishment of their concessional and ordinary resources.
4. The Committee noted the crucial importance of concessional resources, and particularly of IDA, in the development strategy and programs of the low-income developing countries. The Committee urged that the proportion of aid flows to the poorest developing countries be increased. The Committee was concerned that the likely reduction, in the absence of further action, in IDA commitment authority during the Sixth Replenishment period would have a serious impact on the economies of IDA recipients. It would disrupt the momentum behind development efforts and programs so assiduously built up through sustained efforts over several years.
5. The Committee felt that it was important and necessary to resolve the crisis now faced by IDA and to take steps to address the problems in FY82 and FY83 and beyond. In this connection, the Committee welcomed the action taken by some donors to release the full amount of the second tranche of their contribution to IDA-6. It noted the importance attached by a number of donors to finding ways of reducing current and prospective shortfalls of IDA’s commitment authority in the years FY82–84. Several ways including waiving or relaxing the pro rata provisions of the IDA resolution as well as the creation of a Special Fund, which would provide additional resources, have been proposed. Progress made in considering these alternatives in informal meetings held by donor representatives over the last week was welcomed in order to develop specific action programs which could be quickly translated into operational mechanisms so that original planned commitment levels could be maintained to the maximum extent possible. The Committee also agreed that discussions should proceed apace so that the Seventh Replenishment of IDA could begin if possible as scheduled in FY84. The Committee urged that additional concessional cofinancing be made available for IDA projects.
6. The Committee, bearing in mind budgetary constraint considerations, urged governments to accelerate their subscriptions to the General Capital Increase and to release the local currency portion of these subscriptions as rapidly as possible. The Committee also took note of the ongoing discussions concerning the Bank’s borrowing practices and its lending rate policy and urged the Executive Directors of the Bank to reach prompt decisions on these matters in order to enhance the Bank’s funding flexibility both as a means of keeping the cost of Bank borrowing as low as possible and of assuring that planned growth in lending can be financed on reasonable terms. It requested the Executive Directors to continue their study of the scope for an expansion, in real terms, of World Bank lending.
7. The Committee reaffirmed the importance of energy investment in the developing countries, particularly the poorest among them and noted with satisfaction that the Bank’s lending program for energy has expanded rapidly and now accounts for 25 per cent of total Bank lending as against only 15 per cent in 1977. However, it has reached a point where any further increase would cut into other priority sectors which the Committee felt was not desirable. In the circumstances, the Committee asked the Executive Directors of the World Bank to explore ways that would permit the Bank to prepare and secure financing for an increased program of energy investments including an Energy Affiliate or a Special Fund or agreed cofinancing arrangements. A progress report should be submitted to the Committee at its September 1982 meeting.
8. The Committee, on the basis of the material provided by the regional banks, took note of their resource needs and urged member governments to speedily seek means of financing the future capital requirements of the regional banks’ ordinary and concessional funds at an appropriate level besides completing commitments previously entered into. The Committee also expressed its full support of the regional banks in their efforts to serve as catalysts and seek expansion in their co-financing programs.
9. The Committee expressed its appreciation to the Task Force on Non-Concessional Flows on its useful report and it noted its general conclusions and recommendations. It asked the Executive Directors of the Bank and the regional banks to consider the recommendations of the Task Force taking into account their legal and procedural implications and report their deliberations to the Committee in due course. The Committee also considered it desirable that appropriate arrangements be made to periodically review further developments in the field of non-concessional flows. The Committee decided to make the report of the Task Force on Non-Concessional Flows public.
10. In the area of cofinancing, the Committee noted with satisfaction the sizable expansion achieved by the World Bank. It endorsed the efforts of IBRD and IDA, where appropriate, to secure an increase in co-financing from all sources on terms suitable for and acceptable to the borrowers and asked the Executive Directors of the Bank to consider the various proposals on cofinancing which they will be discussing and to report on them if possible to the September 1982 meeting of the Committee.
11. As a follow-up of its earlier discussion at Gabon in May 1981 and in Washington in September 1981 on the Sub-Saharan African Action Program, the Committee reviewed the Bank’s further discussions with the EEC, OPEC aid agencies, bilateral donors, the African Development Bank and the African Governors’ Group. The main focus of these discussions was on the policy and financial issues facing the sub-Saharan countries. The Committee urged the World Bank to move expeditiously to assist the sub-Saharan countries to formulate specific programs of action and, taking account of the Dakar Memorandum of March 3, 1982 presented at its meeting, to continue its dialogue with donor countries in order to enhance the flow of aid in real terms necessary to support such programs of action.
12. The Committee recalled its consideration on previous occasions of the G-24’s Program of Immediate Action and the Brandt Commission recommendations. Both the Fund and the Bank had considered, and in some cases implemented, some of the recommendations applicable to them. The Committee asked the two institutions to present to the September 1982 meeting of the Committee reviews of the status of implementation on the recommendations which are of particular relevance to the Committee’s work.
13. In Gabon the Committee decided in principle to establish a Task Force to carry forward and widen the continuing study of the problems affecting the volume and quality and the effective use of concessional flows in the shorter and longer terms. In pursuance of the Committee’s earlier decision and directive, the Executive Secretary of the Committee, on the request of its Chairman, had undertaken extensive discussions for the establishment of a Task Force on Concessional Flows. The Committee welcomed the successful outcome of the consultations on the terms of reference of the Task Force, its composition, and its chairmanship. The Committee’s approval of it will now enable the 18-member Task Force representing industrial donor countries, OPEC, and developing countries to undertake in the period ahead its task under the chairmanship of John P. Lewis, Professor at Princeton University.
14. The Members placed on record their special appreciation for Mr. David Ibarra Muñoz’s distinguished service to the Committee.
15. The Committee expressed its great appreciation to the Government of Finland for its warm hospitality and for the excellent arrangements provided for the meeting.
16. The Committee agreed to hold its next meeting in Toronto, Canada, on September 5, at the time of the Annual Meetings of the Fund and the Bank.
Report I 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 9, 1982.
See pages 29-32.
Resolution No. 37-7; see page 289.
Resolution No. 37-8; see page 289.
Egypt, Democratic Kampuchea, and South Africa did not participate in this election.
Report II dealt with the business of the Boards of Governors of the Bank, IFC and IDA. Report III 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 9, 1982.
The pro rata principle reflects the burden-sharing agreement among the IDA donors according to which any shortfall in the agreed share or rephasing of its contribution by a participant entitles others to reduce or rephase their contribution accordingly if they so choose.
His Excellency Pedro-Pablo Kuczynski, Minister of Energy and Mines of Peru, served as Alternate Member to permit His Excellency Manuel Ulloa Elías to serve as Chairman.