Book
Share
IMF History (1972-1978) Volume 3
Chapter

Review of Performance of the Development Committee

Author(s):
International Monetary Fund
Published Date:
February 1996
Share
  • ShareShare
Show Summary Details

The resolution establishing the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee) in October 1974 called for a review of the performance of the Committee after two years. In 1976, the Executive Directors of the Fund and of the World Bank sent to the Boards of Governors a report in which they recommended that the Development Committee’s performance be further reviewed after four years from the effective date of the establishing resolution, in effect permitting the Committee to continue for another two years before its performance was assessed. The Boards of Governors adopted a resolution (No. 31–9) to that effect on October 5, 1976.

In the 1978 review of the performance of the Development Committee by the Executive Directors of the Fund and the Bank, a number of suggestions were made for the reorganization of the work of the Committee, and it was recommended that the Committee continue and that its performance be reviewed again in another two years’ time. The Board of Governors of the Fund adopted a resolution (No. 33-10) agreeing to this recommendation on September 27, 1978.

The two reports, with the resolutions, are reproduced as (A) and (B) below.

(A) Report of the Executive Directors of the Bank and the Fund Concerning the Review of Performance of the Development Committee

(1976)

1. Summary and recommendations

The parallel Resolutions of the Boards of Governors of the Fund and the Bank establishing the Joint Ministerial Committee of the two Boards on the Transfer of Real Resources to Developing Countries (Development Committee), which were adopted on October 2, 1974, provide no terminal date for the Committee but that “At the end of two years from the effective date of this Resolution, the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate.”1 In accordance with the discussion during the January 1976 meeting of the Development Committee, the Executive Directors of the Fund and the Bank are submitting this report. The preparation of this report has been undertaken in collaboration with the Acting Executive Secretary of the Committee, who agrees with this report and its recommendations.

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

2. Background

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

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

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

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

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

3. The work of the Development Committee

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

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

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

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

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

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

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

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

Review of Performance of the Development Committee Resolution No. 31-9 of the Board of Governors

Whereas the Board of Governors at its 1974 Annual Meeting adopted Resolution No. 29-9 entitled “Establishment of Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries”; and

Whereas paragraph 7 of that Resolution provides that at the end of two years from its effective date the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate; and

Whereas the period of operations of the Committee has been brief, and affected by special events.

Now, therefore, the Board of Governors hereby resolves:

  • That “four years” shall be substituted for “two years” in paragraph 7 of Resolution No. 29-9 of the Board of Governors adopted on October 2, 1974.

(B) Review of the Performance of the Development Committee

(1978)

1. The Development Committee, together with the Interim Committee of the Fund, was established on the recommendation of the Committee of Twenty on the completion of its work in June 1974. It was conceived as a forum for discussion of issues relating to the transfer of real resources at a high political level between all members of the Bank and Fund representing developed, opec and other developing countries and with observers in attendance from regional development banks and other relevant agencies. The intention was that the Committee should not duplicate or supplant existing organizations but would complement them and, where feasible, suggest courses of action or give political impetus to matters under consideration in the relevant fora. The objective, as noted in the preamble of the Resolution establishing the Committee, was to help provide

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

2. The parallel Resolutions dated October 2, 1974, with which the Development Committee was established also contained a provision that at the end of two years from the effective date of the Resolutions, the Boards of Governors of the Fund and the Bank should review the performance of the Committee, and should take such action as they deemed appropriate. This period was extended in 1976 for two years by the Boards of Governors and the present review is in compliance with that decision.

3. The attached annual report gives details of what has been done in the past year ending June 1978. As regards the work in the preceding three years, the Committee, apart from its important global overview function, was naturally concerned initially with short-term issues which arose from the dramatic changes in the world economy during 1973-74. Its strong support helped the establishment of a temporary intermediate lending facility of the Bank (Third Window) and an imf Trust Fund to provide additional concessionary resources to meet balance of payments needs of the low-income countries. Both these matters had been under active consideration of the Boards of the two institutions. The long-term issues of development aid flows, both bilateral and multilateral, remained under constant examination in the context of the World Bank studies of the capital requirements and prospects of developing countries and the imf’s periodic review of the world economic situation and outlook. The contribution of the Committee here cannot always be measured in concrete terms but the fact that these critical issues and proposals for improvements in flows remained under constant review did help to focus the attention of Finance Ministers and at least held the line and made some improvements under admittedly difficult economic conditions and a generally unfavorable climate. The Committee also undertook extensive and useful work with some positive results in the area of access to capital markets of which full details have been given in the annual report relating to the period in question.

4. It is generally recognized that the Committee is well suited and capable of playing an important role. Its continuance was strongly urged by the G-24 at its meeting in April 1978 in Mexico City. Some disappointment has however been expressed on the achievements of the Committee so far and in particular on its ability or produce concrete results relating to the transfer of resources. There have also been some expressions of concern that the Committee was tending to pursue issues of a largely technical nature and that its work lacked focus. It is therefore important to use the occasion provided by this review for a clear reiteration of the Committee’s assigned role and a frank discussion of the Committee’s limitations and the impediments which it has faced in its operations. The review therefore comprises an examination of its mandate, its structure, and its work methods with a view to improving the Committee’s effectiveness for the attainment of its objectives in the period ahead.

5. There has perhaps been some misconception of what can be accomplished in a forum like the Development Committee, and this may account for at any rate some of the disappointment that has been voiced with its performance. It was not conceived as a decision-making or formal-negotiating body. It has no collective executive responsibility and no funds of its own to control. Rather it is a forum—the only one which exists—where Finance Ministers from the developing countries can discuss broad problems of development and resource transfers with their counterparts from the developed countries in the presence of all the main multilateral organizations concerned with North-South development issues. The mandate of the Committee was kept deliberately very wide to provide Finance Ministers an opportunity for a comprehensive overview of diverse international activities in the development area. The intention was that such discussions would illuminate the subject through a frank exchange of views and lead, in a number of cases, to a consensus at a high political level on what should be done. Of course any consensus can only be translated into action in other fora, e.g., in the governing bodies of other international institutions or in the governments of the individual member states. There is an inevitable timelag between these two processes and it would be unrealistic to suppose either that a consensus on many of the intractable problems of development can easily or quickly be reached or, once reached, can be quickly implemented. One can only really judge the effectiveness of a committee of this sort in the longer term.

6. It is sometimes suggested that the process of decision-making would be assisted if the Committee were to be restructured as a Bank-only Committee, rather than a joint Bank/Fund Committee: it could then be the counterpart of the Interim Committee of the Fund, have a more clearly defined role, a more focused agenda and intensive preparatory work in the Bank Board with the full backing and direct involvement of the Bank management resulting in a possibly more concrete outcome from its deliberations. A Bank-only Committee would, however, inevitably be a somewhat different type of committee from the present one. Its mandate would tend to be more restricted since it would be difficult for it to deal, as the present Committee does, with some issues of concern to the Fund, and to take an overall view of problems which straddle both the Fund and the Bank—e.g., the general problems of medium-term adjustment and the current study of export earnings stabilization. Bearing in mind the development aspect of many of the topics dealt with by the Fund, and the institution’s past and potential future contribution to the Committee’s work, the loss of the Fund as one of the sponsors of the Committee would need to be weighed very carefully against any marginal gain from a Bank-only Committee.

7. Furthermore, it is not easy to see how a Bank-only Committee could, in practice, be any more “decision-oriented” than the present Committee. It seems unlikely that there will be many purely Bank issues that would require the intercession of a Committee of Ministers in the decision-making process—it is the Executive Board which is empowered under the Articles of Agreement to take decisions and make recommendations to the Board of Governors as a whole. And insofar as a Bank-only Committee were to consider issues of wider significance it would surely find itself up against the same difficulties as the present Committee in reaching “decisions” and generating the political will necessary for consensus.

8. As regards the Committee’s methods of work, the improvements introduced in the 1976 review related to having a more sharply focused agenda, holding of meetings only when issues are ready for active consideration at ministerial level, and better preparation through closer liaison with Executive Directors and increased high level political consultation in advance of meetings in order to define the issues for discussion, to narrow differences and thereby assist in reaching agreement.

9. Some of these changes in procedure have been adopted with beneficial results but more still needs to be done to enhance the effectiveness of the Committee. There could be greater selectivity of suitable issues even within an agreed work program. Unfortunately, the interests of Members on different subjects, if not conflicting, are seldom equal or uniform and when some subjects get picked up which do not enjoy adequate or wide enough support among the Members, then those not in agreement tend to consider the work as unsuitable or lacking in focus. This further highlights the need for care in identifying and selecting important issues of general appeal which might be advanced through debate and consensus at a high political level. Matters of peripheral interest, however important to some, should be given a low priority or even excluded altogether.

10. At present, documents are prepared largely with the assistance of the Fund and Bank Group staff. They are then discussed as necessary at a technical level in the Working Groups and are screened and prepared for ministerial consideration by preliminary discussion between Senior Officials from national capitals. The access to Ministers which Senior Officials enjoy and their feel of what can be achieved at political level now provide an important element of political preparation which was not present to the same degree in the past. This process helps to sift those issues which need not go beyond the Senior Officials from those which because of their importance or policy content require consideration at ministerial level. The process is time consuming, but many of the issues before the Committee are complex and do not admit of easy or quick solutions. Consideration of these issues in the currently unfavorable economic climate, which inevitably makes it more difficult to reach a consensus, accounts perhaps for a good deal of the present sense of frustration and lack of adequate progress.

11. The process of achieving closer contact with Executive Directors as representatives of member governments has been further strengthened. The recently evolved device of periodic informal meetings between the Executive Secretary and Executive Directors, in addition to formal Board discussion of issues within their purview has been found to be helpful.

12. Careful adherence to the improvements mentioned above should lead to better preparation and selectivity of subjects and greater effectiveness of the Committee which, in the last two years, has also been somewhat constrained by parallel discussions on the same issues in other fora like the ciec. The attached annual report, apart from indicating what has been done in the past, also gives details of what work is in hand and remains to be done from the current agreed work program, including important topics such as the continuing examination of issues relating to oda, the stabilization of export earnings, the role of mdis, and annual consideration of a World Development Report. For a sharper focus and for assigning the right priorities, a detailed work program for each year should be worked out by the Senior Officials.

13. A new perspective for the Committee’s work should be provided by the World Development Report. This will present an excellent opportunity for annual consideration of broad development issues and will facilitate their comprehensive and continuing analysis in a manner which will help in the formulation of development strategies particularly for accelerating growth and alleviating poverty in countries at various stages of development. There is also the expectation that the Brandt Commission’s deliberations may succeed in creating a wider and deeper understanding of the growing interdependence and mutuality of long-term interests of both industrial and developing countries and thus help generate the political will so crucial to the success of the Committee. The Committee could be one of the important fora for follow-up discussion at intergovernmental level of those sections of the Brandt Commission report which are the concern of Finance Ministers.

14. With greater selectivity of suitable topics, sharper focus on issues of interest to Ministers, improved work methods outlined above involving more political preparation and closer contacts with Executive Directors as well as with Senior Officials from national capitals, the Committee should provide a unique opportunity for constructive and profitable dialogue between industrial and developing countries in an earnest and cooperative search for mutually beneficial solutions to economic problems. The Committee, given of course the political will, could thus play an effective role in increasing the transfer of resources to developing countries in the future.

Review of Performance of the Development Committee Resolution No. 33-10 of the Board of Governors

Whereas the Board of Governors at its 1974 Annual Meeting adopted Resolution No. 29-9 entitled “Establishment of Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries”; and

Whereas paragraph 7 of that Resolution provides that at the end of two years from its effective date the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate; and

Whereas this period was extended by the Boards of Governors in 1976 for a further two years; and

Whereas the Development Committee has submitted to the Board of Governors a report on the Review of the Performance of the Development Committee;

Now, therefore, the Board of Governors, affirming the importance of furthering the objectives of Members in adopting Resolution No. 29-9, a copy of which is attached, recognizing the potential importance of the Development Committee, and desiring to enhance the effectiveness of the Committee, including in particular improvements in its work methods and procedures as a means for achieving the objectives of the Committee, hereby resolves:

  • (a) That the review of the Board of Governors pursuant to paragraph 7 of the said Resolution is deemed to have been carried out;

  • (b) That at the end of two years from the effective date of this Resolution, the Boards of Governors of the Bank and the Fund shall again review the performance of the Committee and shall take such action as they deem appropriate, taking into account (i) the views and recommendations of the Executive Boards of the Fund and the Bank, expressed at an appropriate time but not later than June 30, 1980, and (ii) the views and recommendations of the Development Committee; and

  • (c) That the Chairman of the Development Committee, the President of the Bank, and the Managing Director of the Fund will consult together on ways to improve the effectiveness of the work of the Committee, and they will report to the Committee at its next meeting.

Resolution No. 29-9 [above, pp. 575–78; at p. 578].

Resolution No. 31-9 [below, p. 622].

Adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the Bank, IFC and IDA, on October 5, 1976.

Resolution No. 29-9, above, pp. 575–78; at p. 576.

The report is reproduced above, pp. 611–17.

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, 1978.

Above, pp. 575–78.

    Other Resources Citing This Publication