Chapter

Appendix II The Institute of International Finance, Inc.

Author(s):
Donald Mathieson, Eliot Kalter, Maxwell Watson, and G. Kincaid
Published Date:
February 1986
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Since its establishment January 1, 1983, The Institute of International Finance (IIF) has increased its membership to 196. While most members are commercial banks, a number of official export credit agencies have joined as associate members in the past year, as have some multinational corporations. The IIF’s member banks account for about 80 percent of global lending to developing countries.

A primary objective of the Institute is to improve the timeliness and quality of information on sovereign borrowers available to banks and other international lenders. During the past year, the IIF expanded the database that it provides on-line to members. The database now includes approximately 150 series for more than 30 countries, and is being progressively expanded to cover a total of 40–50 developing countries which have significant outstanding borrowings from commercial banks. Information is provided on fiscal policy, domestic economic performance, and the external sector, including estimates of liabilities to main creditor groups.

The IIF also prepared full reports on 33 countries. Staff have visited more than 20 countries, including Mexico, Argentina, Venezuela, Chile, Colombia, Ecuador, Peru, Korea, Indonesia, the Philippines, Malaysia, Egypt, Morocco, Côte d’Ivoire, Turkey, and Hungary. Informal visits have been paid to Greece and Nigeria. Missions normally include both IIF staff and representatives of commercial banks.

In addition to its work on specific countries, the IIF has undertaken a number of general, policy-oriented initiatives. The institutional focus of this work is the IIF’s Working Party on the Future of International Lending, which comprises 50 participants. In 1984, the Working Party created four specialized committees to study the restructuring process; legal and regulatory matters; technical issues, in particular the currency composition of lending; and new initiatives in international lending by private banks and the public sector, as well as obstacles to development of long-term solutions to financing LDC development. The main conclusions of the committees’ reports, made public in September 1984. included an endorsement of techniques designed to foster an early return to voluntary lending, multiyear reschedulings, provision of currency options, and exclusion of trade financing from reschedulings.

In the second half of 1984, the Working Party set up two study groups, both of which involve regulators, officials from multilateral agencies, lawyers, and accountants as well as bank representatives. The primary objective of the first study group—the Task Force on the Regulatory, Accounting, and Tax Treatment of Cross-Border Lending—is to conduct a study to clarify the implications of different national policies, procedures, and practices in the main creditor countries for cross-border lending. A main objective is to find potential ways to overcome some distortions and impediments to international bank lending resulting from such differences. Initially, the North American and European members of the Task Force met separately in Washington and London. Another meeting, which brought together accountants, bankers, and regulators from Europe, Japan, and North America, was held in November 1985 in Washington. The second study group, the Study Group on Insurance and Guarantees, is examining possible mechanisms to insure bank loans or portfolios and spread international risk. It has met several times in Washington and London.

In addition to the Working Party, the Institute has set up an Economic Advisory Committee, composed of the chief international economists of some 20 member banks, to advise the Institute on all aspects of its country economic work, as well as to provide a forum to discuss matters which go beyond the analysis of individual debtor countries, such as alternative scenarios for the world economy and their implications for the resolution of the debt problem. As part of the general services which the Institute provides for its members, the IIF publishes two surveys on a regular basis: a “Survey of Debt Restructurings by Banks” and a “Survey of Official Reschedulings and Balance of Payments Support.”

Prior to the Spring 1985 meetings of the IMF Interim Committee and the World Bank/IMF Development Committee, which focused on the debt problem, the IIF’s Board met to approve a letter to the Chairman of the Interim Committee from the IIF Managing Director, Andre de Lattre. The letter highlighted some issues essential for a sound development of the banks’ role in providing finance to developing countries and was accompanied by a memorandum on factors affecting the future of international lending.

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