Questions in the News
Responses to Questions About IMF Policies and Country Operations
Reform of the IMF
Last Updated: September 6, 2007| Question: Could you please provide an update on the selection process of the new Managing Director of the IMF? When will the next meetings with the candidates take place? |
| Answer:
MR. AHMED: On Friday, August 31, when the nomination period closed, we issued a press release that set out the next steps that the Executive Board would be following in taking forward the process of nominations for the next Managing Director. I can give you a little more information today on timing of that process. Specifically, the Executive Board plans to meet with the two candidates here in Washington during the week of September 17, and it aims to complete its deliberations and to bring the process of selection to closure by the end of September. They will meet with the two candidates, one on each day, and they will have a series of discussions with them. Of course, while the two candidates are here, they may also choose to have other, separate meetings alongside, but they will be meeting in a formal sense with the Executive Board on separate days during that week.
September 6, 2007 Transcript of a Press conference by Masood Ahmed, Director of the External Relations Department, IMF |
| Question: What is the reaction to the nomination of a second candidate for the position of Managing Director, and how does this affect the interview process? Do you expect any further nominations to appear? |
| Answer:
MR. RICE: From the beginning in its communications, the Board has emphasized that this would be an open and transparent process and the nomination of another candidate is in keeping with that spirit. The Board has made clear that candidates can be nominated by anyone and can come from any country within the Fund's membership, and earlier communications from the Board have explicitly welcomed open nominations.
The Board has also indicated that nominations can be received up until August 31 of this year of course. Thereafter, the Board will invite candidates to Washington for discussions. We anticipate that the Board will meet shortly after August 31 to discuss further the process and the timetable going forward. Further communication will be forthcoming at that time.
Again I would just repeat that the process is ongoing and the date for nominations to be submitted is August 31. Thereafter we expect that the Board would meet and there will be further communication on the process and timetable at that time.
August 23, 2007 Transcript of a Press Briefing by Gerry Rice, Deputy Director of the External Relations Department, IMF |
| Question: Could you bring us up to date on the status of the discussions about the financing of the IMF and whether or not there are any immediate board meetings planned on that issue. |
| Answer:
MR. AHMED: As you know, one of the planks of the Medium Term Strategy has in fact been to take forward the work on a new income model for the IMF. Very recently, the IMF Executive Board discussed a staff paper that builds on the report that was done by the Committee of Eminent Persons on the financing of the IMF. That discussion showed that there was a broad consensus among the members that the Fund should no longer rely on income from lending alone to cover its expenses. In a way, it also validated the broad premises and the conclusions of the Crockett Report, that we need to move toward a new income model, and that the recommendations from the Crockett Report provide a sound basis for taking this issue forward. We received guidance from directors on different elements of this and it was clear that there were some areas where there will be a need for additional discussion, and the next step will be for staff to prepare a follow-up paper for discussion before the Annual Meetings in October. In parallel with the work on income, we continue to work on the issue of restraining and managing the expenditure side of the Fund. It is important for the Fund—regardless of the issue of income—as a public institution to deliver value for money for expenditure, and the Executive Board and management have agreed on a medium-term budget framework that looks at a 6 percent real reduction in expenditures over 3 years—a 2 percent a year real reduction—and we see that as being an important plank that runs alongside the work that is being done to develop a new income model. July 26, 2007 Transcript of a Press Briefing by Masood Ahmed, Director of the External Relations Department, IMF |
| Question: Can you provide an update on the progress regarding reforms to the Fund's income model? |
| Answer:
MR. HAWLEY: IMF management has had continuing discussions with the Executive Board on developing a new income model based on recommendations on the report by the Crockett Group. And we are following-up these discussions and in due course there will be a proposal by management of the new income model to the Board.
July 12, 2007 Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, IMF |
| Question: How does the IMF view the idea that the IMF Managing Director and World Bank President should no longer be appointed by Europe and the U.S.? |
| Answer:
MR. AHMED: Speaking for the IMF, let me make the following points. First, this is obviously an issue for the membership of the IMF as to the process that they follow. Second, I think it is important to, in that context, refer you to the report that was sent by the Executive Board to the Board of Governors in September 2006 on the program of governance, quota, voice and governance reforms in the IMF. In that report, there is in fact a section where the Executive Directors say that they will consider, as part of this two-year program of governance reforms, whether further steps beyond those that were discussed by the Board of the Fund, and also the Bank, in 2001, and the steps that were followed for the selection of the Managing Director in 2004, are needed to ensure a fully transparent process for the selection of the Managing Director. That is the last statement by the Executive Board on this issue.
May 10, 2007 Transcript of a Press Briefing by Masood Ahmed, Director of the External Relations Department, IMF |
| Question: Regarding reform of quotas, why would the quota formula not use the blended indicator, incorporating GDP measurements as both PPP and market exchange rates instead of the formulas that possess all the same shortcomings as the old ones? |
| Answer:
MR. BROWN: Whatever ideas individual countries have put forward in the past or now, there was a willingness to come together to say that the work on the reform package should be continued as a priority and in line with the timetable set out in the resolution of Singapore. There was an agreement that a new formula should be simple, transparent, and should capture members' relative positions in the world economy. We made progress at these meetings. If you are going to get a final solution to the issues of quota and voice that accommodates the needs of the developing world, while recognizing the changes that are taking place in the economies of the developed world, then there is going to have to be both leadership and compromise. At these meetings, the IMF Managing Director said that we need to move this forward as a matter of the priority and the Committee agreed. But we also saw around the table that, whatever strong views expressed in the past—and, of course, some voted against the original Singapore resolution—members are willing to work together to reach a solution that will work for the future.
April 14, 2007 Transcript of a Press Briefing by UK Chancellor of the Exchequer Gordon Brown, Chairman of the International Monetary and Financial Committee, and IMF Managing Director Rodrigo de Rato, with John Lipsky, First Deputy Managing Director of the IMF, and Masood Ahmed, Director of IMF External Relations Department |
| Question: Regarding the Fund's income and potential gold sales, what is the general sentiment on gold sales, as well as a much more active management of the Fund's resources? And what is the likelihood that we will see gold sales of the IMF in the coming year? |
| Answer:
MR. DE RATO: We had a chance to discuss with the Finance Ministers the Crockett report, which has been well received by Finance Ministers from what I heard around the table at the IMFC meeting. Next, IMF staff will prepare a paper for the IMF Executive Board, and we will do so based on the concept of an income model based on a package regarding the use of IMF resources: a more efficient use of IMF assets and resources will be part of that package. Regarding the use of our gold, the recommendations of the Crockett Committee are very clear. If there is a decision to do so, it will be in a measured way, a very limited amount, about one-eighth of our gold resources. It will be managed in a way that the proceeds, after inflation, will be the ones that really apply to our income model. In any case, any use of our gold will be done in the context of the agreement of central banks that was previously established. Final positions will not be taken until I make a formal proposal to the Executive Board. MR. BROWN: The Crocket report recommended that, if it were necessary gold sales could happen; it should be done in a measured way; and it should be part of the 2004 central bank agreement about the ceiling on gold sales at any particular point in time. What I found encouraging at these meetings was that there were countries who previously had not been prepared to consider gold sales, but who were prepared to do so now. The next stage is the report from the Managing Director to the next meeting about how we move forward with this issue of the income of the Fund. Gold sales are potentially a part of that. April 14, 2007 Transcript of a Press Briefing by UK Chancellor of the Exchequer Gordon Brown, Chairman of the International Monetary and Financial Committee, and IMF Managing Director Rodrigo de Rato, with John Lipsky, First Deputy Managing Director of the IMF, and Masood Ahmed, Director of IMF External Relations Department |
| Question: Can you elaborate a bit more on the quotas issue—specifically on the progress to date? In particular, on the inclusion of GDP as one of the variables in the formula that determines quotas, are there discussions on using purchasing power parity (PPP) as a part of the GDP calculation? |
| Answer:
MR. DE RATO: Quotas are a key element of the governance of the institution because through the quota, decisions are made, allocation of resources is made, and even capacity to absorb financial packages is decided upon,. The quota is decided by formula, so the formula is a key question in itself. I think the important decision in Singapore was to decide that the actual formula that is in place was not sufficiently simple and transparent and that we need to move to a more transparent formula that will allow calculated quotas to represent the real weight in the world economy of the different countries. This is very important for a public institution like this one because that representation introduces important steps of legitimacy. The discussion on the formula right now is about the components of the formula, and GDP is certainly an obvious component of the formula that tries to measure economic weight. But there are also other components like trade and financial openness, and there are also countries that claim that variability and reserves should be part of this discussion, among other possible components. On GDP, there is a discussion on whether it should be GDP at market prices or we should introduce other concepts, like PPP, but also other possible technical approaches. It is too soon for me to give a clear line of where things stand. The staff has been providing the Executive Board with important analysis. We already have held two or three different discussions on these issues, and we are identifying the crucial questions. I think at the same time there is a positive attitude that is to keep things on the table. There have not been any extreme positions against any possible solution, but, of course, countries have their own positions, and that is completely understandable. We are moving forward in the context of consensus, but we have not yet arrived there. The meetings this weekend will provide an opportunity to listen to the Ministers and receive political guidance on some of these questions, and then that should give us a framework to make more specific proposals to the Executive Board and probably narrow down options so as to arrive at the Annual Meetings in October 2007 with a more detailed description of the components that should be included in the future formula. April 12, 2007 Transcript of a Press Conference by IMF Managing Director Rodrigo de Rato with John Lipsky, First Deputy Managing Director, and Masood Ahmed, Director of the External Relations Department, IMF |
| Question: Regarding the new commitment for the cooperation among IMF and the World Bank, what are the first practical and tangible steps you are going to take and will we see something already at the Spring Meetings as an expression of this new cooperation? |
| Answer:
Sure. On the report that has been produced by the External Committee on Collaboration Between the World Bank and the IMF, which was headed by Pedro Malan, the next step in the process is that, having delivered the report to the two boards, the boards and the management of the two institutions are now going to digest the document. There will probably be a further opportunity for the IMF Executive Board to have a discussion of this report with the chairman of the committee and other members of the committee who might be there before the Spring Meetings. Then at the Spring Meetings themselves, the document will be circulated for information to ministers who may wish to comment. Beyond the Spring Meetings there will be then a process where drawing on the suggestions and recommendations that had been made in the report, we will be putting together a program of work in terms of how exactly we can take some of those ideas forward. Some will be issues that can be dealt with by the Fund itself, and there will be other areas where clearly the nature of the report is such that it can only be done in collaboration between the two institutions. So there will be joint proposals that will be put together by the two staffs to be considered by their respective boards. That process will unfold over that period. March 1, 2007 Press Briefing by Mr. Masood Ahmed, Director, External Relations, IMF |
| Question: Is there any update on any sort of agreement on the formula for quotas? What is the timetable for reaching agreement? |
| Answer:
Our intention is that we will progress through the Spring Meetings. There is discussion going on both within the Fund and a number of other fora. You know the G-20 this year is also discussing the issue of quota formulas. But the expectation is that by the end of the year we will have agreement on the quota formula and then the basis to actually take that forward and implement the recommendations of that process in terms of the next round of ad hoc increases, which of course is the practical application of the formula itself.
March 1, 2007 Press Briefing by Mr. Masood Ahmed, Director, External Relations, IMF |
| Question: The Report of the Crockett Committee, which included former Federal Chairman Alan Greenspan and European Central Bank President Jean-Claude Trichet, recently recommended that the IMF sell US$6.6 billion in gold to put its finances on a better footing. Is the IMF considering such a move? |
| Answer:
As you say, there was a group of people headed by Andrew Crockett, but including a number of other important central bank governors and other eminent personalities who had been asked by the Managing Director of the IMF to look at the Fund's current income model and to identify ways in which over the medium term we could move toward a sustainable financing model that better reflects what the Fund currently does and reflects the interests of the membership. That group reported back, and their report, which concluded that the current income model is no longer adequate for the Fund, came up with a package of measures that in their view would both better reflect what the Fund currently does, and would also provide the income required to meet the operating costs of the Fund on a sustainable basis going forward. As part of that package, one of the elements they recommended was to look at the possibility of creating an endowment that would be funded by the sale of a limited portion of the gold reserves that the Fund holds. The income from this endowment could contribute—as one of the elements—toward the operating costs of the Fund. In making that proposal the Committee indicated very carefully that they felt that if the membership were to go forward with it, it would need to be done in a way that was tightly ring-fenced. It would be need to be done in a way that did not disrupt the market. It would be part of the planned sale of gold that central banks are planning under an agreement. The Committee has made its recommendations to the Managing Director, which will form the basis for discussions by the Executive Board. Based on that, the Managing Director will at some point during the course of the year make proposals to the Executive Board on how he believes the issue of addressing the income model of the Fund should be addressed going forward. February 15, 2007 Press Briefing by Mr. Masood Ahmed, Director, External Relations, IMF |
| Question: Regarding the Report by the Committee to Study Sustainable Long-term Financing of the IMF, is there a sense that some of the recommendations might result in the exclusion of some countries that had been receiving IMF services for free and that these countries would have to now pay a charge? Regarding the discussion of examining the costing of the loans, is there a general sense that this might see the loan costs rise? |
| Answer:
MR. AHMED: Just to be clear on that, I think the Committee's proposal is to in fact move away from a model of financing which relies primarily on one source—which is charges on lending—to a diversity of sources. Then some would help to ensure that the charges that you have on loans—as the Committee pointed out in its report—need to be set in relation to market conditions rather than be driven by the need to finance the IMF. So if the Committee's recommendations are endorsed, what that would do on the charges side for lending is to make the charges more predictable and more stable rather than reflecting the need to finance the IMF, which would entail unpredictability because it depends then on the volume of loans as well.
In terms of the charging for services—in particular for technical assistance—clearly, on the one side there is the merit of introducing some charging for services not so much as a revenue-raising measure, but, rather, as a way of introducing more transparency, more discipline, and a greater sense of cost-effectiveness on the part of users of those services. So from an efficiency point of view and an incentive point of view, you can make the case that there is some merit in charging.
The other side—the tension that they have identified in their report—is that you want to first of all recognize that quite a lot of the technical assistance that the Fund provides has a "public good" aspect. So it is not simply a fee-for-service kind of exercise. It is really contributing to either financial and economic stability in the country or strengthening capacity with spillover effects for the rest of the world.
And since 80 percent of our technical assistance goes to low and lower-middle-income countries, one would need to ensure that any mechanism for charging is put in place in a way that does not exclude them on the grounds of ability to pay. I think that yesterday Mr. Crockett and the Managing Director both took on board the notion that the fact that having charges may also mean that there is some sort of mechanism for financing them, and the report does refer to the possibility of donors financing it.
February 1, 2007 Transcript of a Press Briefing by Masood Ahmed, Director, External Relations Department, IMF |
| Question: Regarding one of the Crockett Report's recommendations on the sale of gold, is there concern that the U.S. government has said many times that it is against the IMF selling gold? Also, why is it that the Report values gold at $500-an-ounce when the latest market numbers were closer to $650? |
| Answer:
MR. CROCKETT: Obviously there have been concerns that nothing should be done that destabilizes the gold market, and the proposals put forward by the Committee are quite careful in guarding against that danger. As I suggested, the amounts are modest. They do not result in additional gold sales into the market because they will be incorporated within the Central Bank Gold Agreement, and they will be ring-fenced against further sales. It will be up to individual countries to express their positions, but I think the Committee which, by the way, includes the Governor of the South African Reserve Bank, has been quite careful to try to devise proposals that do not create dangers of destabilizing the gold market.
The $500-an-ounce valuation was taken because this was the average price over a period of 2 years, and since the gold sales themselves will not take place all at once or immediately—they will be averaged over a period of time—it seemed to us more reasonable to take an average price rather than the present price, which is relatively high. Of course, one doesn't know what the price will be in the future.
January 31, 2007 Press Briefing on the Final Report by the Committee to Study Sustainable Long-term Financing of the IMF (Crockett Report) by Rodrigo de Rato, Managing Director of the IMF and Andrew Crockett, Chair, Eminent Persons Committee |
| Question: I was wondering when you think a decision can be taken on all the issues covered by the Crockett Report? MR. DE RATO: I don't think we can have a specific timetable. As you know, the medium-term strategy has been discussed in different contexts over the last year and a half and will continue for the next two years on governance. The next few months will be devoted to discussing specific proposals with the IMF ExecutiveBoard and also with the membership. I think the Spring Meetings will give us a very good opportunity to have a discussion with the ministers, and then we will determine the degree of consensus. |
| Answer:
MR. DE RATO: I don't think we can have a specific timetable. As you know, the medium-term strategy has been discussed in different contexts over the last year and a half and will continue for the next two years on governance. The next few months will be devoted to discussing specific proposals with the IMF ExecutiveBoard and also with the membership. I think the Spring Meetings will give us a very good opportunity to have a discussion with the ministers, and then we will determine the degree of consensus.
January 31, 2007 Press Briefing on the Final Report by the Committee to Study Sustainable Long-term Financing of the IMF (Crockett Report) by Rodrigo de Rato, Managing Director of the IMF and Andrew Crockett, Chair, Eminent Persons Committee |
| Question: I was wondering if you could provide more detail about bilateral services and capacity building, specifically how to address the question of user fees for countries as recommended by the Report? |
| Answer:
MR. CROCKETT: First of all, the report recognizes that this is not an easy question and the answer is not simply to apply user fees directly to countries. There are, as I mentioned earlier, important elements of "public good" in the provision of technical assistance. It also ties in with the Fund's financial assistance in that in order to make financial resources in support of economic programs effective, you may need to have the support of technical assistance and capacity building.
Nevertheless, at the same time, as most of the members of the Committee pointed out, if you do not have any mechanism for effectively charging, there is a risk that the supply of technical assistance will not be properly matched with the benefits coming from it. So what the report does is invite the Executive Board to look, on the one hand, at the arguments in principle for using economic mechanisms such as charging to ration the efficient use of resources along with, on the other hand, the requirements of the desire not to adversely affect the willingness and ability of poorer countries to use this.
Second, charging and transparency do not necessarily imply that the resources needed to pay for technical assistance come from the individual beneficiary country. It could be provided by donor resources or it could be provided by the IMF under an explicit attribution of these costs to a particular budgetary source within the Fund. So I think the Committee is well aware of the desire not to adversely affect this, but it does feel that there may be scope for using economic mechanisms in more effective ways to help allocate these resources.
January 31, 2007 Press Briefing on the Final Report by the Committee to Study Sustainable Long-term Financing of the IMF (Crockett Report) by Rodrigo de Rato, Managing Director of the IMF and Andrew Crockett, Chair, Eminent Persons Committee |
| Question: On the issue of the waiver of administrative costs on the Poverty Reduction and Growth Facility, does the Report envision a reduction in the IMF's contribution to help poor economies? How does that work? |
| Answer:
MR. CROCKETT: In effect, the IMF has waived for the last several years the administrative costs that it incurs in managing the PRGF. It did not originally waive these costs; these were charged to the trust fund that administers it. At a time when the Fund had strong income, it was decided by the Executive Board of the Fund that it could shoulder these administrative burdens itself rather than charging them to the trust fund. We now face a different circumstance in that the Fund is short of income and the Committee is simply pointing out that this waiver—made in the circumstances of greater income adequacy—was not an obligation right from the beginning. The waiver can easily be changed, and in some sense it is appropriate that the donor countries should bear the burden rather than the Fund, which represents a generality of countries including poor and middle-income countries.
January 31, 2007 Press Briefing on the Final Report by the Committee to Study Sustainable Long-term Financing of the IMF (Crockett Report) by Rodrigo de Rato, Managing Director of the IMF and Andrew Crockett, Chair, Eminent Persons Committee |
| Question: Recently, the Executive Board discussed the quota formula, and you plan to have another one before the Spring Meetings. What was the conclusion or the flavor of the last discussion, and what is the date of the next discussion? |
| Answer:
The last time the issue arose, there was a broad and constructive discuss ion. Another discussion has been scheduled, but I don't believe that the second discussion will be a decision-making moment. I think that this is a complex question in which, of course, different views have to be narrowed down. The staff is working on options that were put on the table for different countries, and that could narrow the differences. I think it will take a few discussions, but I envision moving forward on this issue because it is a key question. I think all countries understand that we not only need a new formula, but also we need to apply a second ad hoc increase to really give the most dynamic economies—but specifically emerging economies—a bigger voice in the Institution.
At the same time, what we will have is probably a much more advanced discussion in the next few weeks on low income countries' basic votes—on basic votes not only for low income countries but basic votes that will effect mainly low income countries.
But as you know, the agreement in Singapore is that there is to be a package. Everything will have to be decided at the end at the same time. What I see right now is that on basic votes, we probably will arrive to a definitive line fairly soon, and we will keep the momentum on the discussion of the formula.
January 16, 2007 Press Conference by Managing Director Rodrigo de Rato, IMF |
| Question: Do you believe that the MTS reform program is going according to the wishes of the Managing Director? What would you say are the priorities in this work program? And what would he like to see finished or what progress made on any of these? |
| Answer:
I think that the Managing Director is committed to pursuing the reform agenda, which was endorsed most recently in Singapore. However;however, some elements of that reform agenda have a longer preparatory time and others have a shorter time. For example, in the area of quotas and voice, which is very high priority for the institution, we have, in terms of deadlines, the Annual Meetings of 2007 as a time when we need to deliver on a number of things and then again at the 2008 Spring Meetings and then subsequently the Annual Meetings of 2008. But even in that area, to be able to get to the deliverables that are envisaged for the Annual Meetings of 2007, we need to make progress in the coming months. So, between now and the 2007 Spring Meetings, we will be working on the quota formula, and we will be working on the amendment for basic votes. We don't expect that we will close on the quota formula between now and the Spring Meetings—it is something that is going to take a little bit longer. But it is an area where we need that time to be able to meet the deadline for September 2007.
In other areas where we actually have deliverables for Spring that are expected by the IMFC, for example, we are expected to come back with a view on the crisis prevention instrument for which we are now doing some work. That is, obviously, again a high priority for the institution and for a number of members.
Similarly, on surveillance there is a body of work that is underway, some of which has been done, some of which we are now proceeding to do in terms of looking at the 1977 decision on exchange rate surveillance. There is work to be done on strengthening the coverage of financial sector issues and surveillance. It doesn't lend itself to a single moment, rather it is an ongoing effort that will be accomplished over the coming years.
The areas that I have focused on from what is actually a 16-page statement on the work program offer the main focus of the priority areas: quotas and voice; surveillance; trying to come forward with a view on whether and how we can strengthen our instruments for crisis prevention; clarifying our role in low income countries and particularly focusing on the issue of debt; and then, as I said, two areas of what you might broadly call housekeeping which we need to deal with, one of them being the work on the income of the Fund and the other one being the relationship between the Fund and the Bank. We currently have external groups examining both of those topics.
My expectation is that those groups, the group of eminent persons chaired by Andrew Crockett on how best to ensure more stable sources of income for the IMF, and the group chaired by Pedro Malan looking at IMF-World Bank collaboration, will come in the next few weeks. We will have initial discussions, and those discussions will probably take more than one round, but we will start those during the coming months.
November 30, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Regarding the two reports being prepared externally by, first, the group of eminent persons chaired by Andrew Crockett on how best to ensure more stable sources of income for the IMF, and second, the group chaired by Pedro Malan looking at IMF-World Bank collaboration, have there been any preliminary reports as far as the people who are dealing with the financial parts of the Fund? How have they been meeting? Will the reports be made available to the public? |
| Answer:
In both cases, the groups concerned have been meeting, both among themselves and indeed with a number of other people, to try and get views. I know, for example, the group looking at Bank-Fund collaboration, Pedro Malan's group, has interviewed people extensively, both in the two institutions, but more importantly representatives of different parts of the membership of the two institutions to get their perspective. They have also had, as you may recall, an open web site to get people to submit comments. They have received a few inputs from civil society and other interested parties. So they have been having their discussions.
I am sure they are putting those down on paper somewhere as a process for them to have an internal discussion. But at this stage, it is not something that we have as an institution been party to.
Similarly, the group that is looking at income, Andrew Crockett and the other eminent people in that group, have been meeting and discussing among themselves. They have asked Fund staff for information, and the Fund staff have provided that information to them. But the discussion is one that they are having, and they will then provide the reports.
So the first time we will actually get documents is when those groups complete their work. Once we have those documents, we will have a discussion and the Board will take a view on how best to make that information public.
November 30, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: What is the process of reviewing the 1977 decision on exchange rate surveillance? What changes are up for consideration? What are the mechanics of that decision? |
| Answer:
What I would say in response to that is that the review process will occur in two parts. There will be an earlier discussion in January followed by a second discussion probably before the Spring Meetings. What we are doing now is reviewing the decision. As you know, the decision is 30 years old. Clearly, the question is: are there elements of that decision, which was crafted at a particular time when the world economy functioned a particular way, that are still relevant, and if not, how best can they be updated to reflect best practice in the way in which surveillance is done today?
As to the mechanics of it, if there is agreement that both a review is needed and on what the elements of that review ought to be, that will be crafted in the form of a new draft decision, which would then have to be approved by the Board.
November 30, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Two weeks after the end of the Annual Meetings in Singapore, how you are looking to proceed on the IMF vote reform? How is that going to move ahead now and into the next stage? |
| Answer:
In Singapore we had the overwhelming endorsement of the membership to go forward with the reform program. The next step is to begin to work on the different elements. We want to work on putting together an amendment to the Articles of Agreement that would deal with the increase in basic votes; we want to work on how to strengthen the offices of the Executive Directors that represent those countries; and we want to work on the quota formula that will then guide further increases. Work on all of these is now beginning, and our expectations are to come back in a year's time, by the 2007 Annual Meetings, with enough progress on all of these fronts with a view, again, to take all of these decisions no later than at the 2008 Annual Meetings. The Managing Director will be reporting on progress at the IMFC meetings in the Spring.
In going forward in all these areas, the key for us is that we need to not only do the technical work but, as we did in the six months preceding Singapore, do broad-based consultation with all of the membership, so that whatever proposals we come up with are proposals that have broad support and that will enable us to go forward in the same way that we did in Singapore. So, when we have a work program discussion at the Board in about a month's time, it will lay out specific milestones between now and next Spring.
October 5, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Who will put together the new quota formula? Will you collaborate with experts from outside the Fund? |
| Answer:
In the end, the Managing Director will put forward a proposal, and the Board will consider it. In order to get to that proposal as we have done in the previous phase, we will draw upon all the work that is being done outside and we will be doing work inside. So our view has been that if people are working on this outside and they have perspectives that we can draw on, that is something we would be happy to build on.
October 5, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: The Brazilian Economic Minister has said that the current project of reforming the IMF might enhance the majority that the world's leading economies have in the IMF. What assurances do you offer that this is not the case? |
| Answer:
In the discussions that have taken place, the point that has been made by all is that the twin objectives of this reform program are, first of all, to make sure that the relative weight of economies in the world is reflected better in their relative weight in IMF quotas, and that applies to a lot of emerging markets. It applies also to some other advanced countries. So, as we move forward, we need to make sure that that the weight of the economies is reflected better in the IMF quotas.
The other point that is important in this regard is to note that some of the larger advanced economies have already stated publicly that they will not be taking up all of the increases in their potential quotas if their quotas go up under the new formula. That, of course, means that there is more space for other countries to be able to have their quotas go up.
The final point is that the other objective of this program is to make sure that the poorest countries—whose weight in the world economy is small, but where the Fund plays an important role—also have their share in the quotas protected.
That is the agenda that is going forward. In the end, discussions on the formula and where we come out will be something that will be discussed in the Board. But I think the intentions of making the IMF more representative and the quotas in the IMF more reflective of the world economy today are something that everybody has bought into.
October 5, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Countries like India, Brazil, Argentina, and Egypt have expressed unhappiness over the IMF reform package as it stands now, and expressed some dissent as well. The Finance Minister of India today proposed GDP based on PPP as a new formula for IMF reform in respect of quotas and voting rights. What has been the response, if any, of the IMF to these new views from the Indian side? |
| Answer:
I understand that there are some countries who are expressing reservations about future discussions, but I have heard all of them expressing their backing to, first, the ad hoc increase for very underrepresented economies; second, the need for low-income countries to be protected and enhance their voice; and third, the need for the Fund to reform its governance and quotas and voice, and to review the actual formula. So, in that respect, I think there is a consensus on what to do; there is a consensus of some of the measures that have been voted on right now. There are some different positions regarding the future course, for instance, on the formula. All of that will be part of the discussions that we will start, in the next few weeks. Certainly, we will try to reach the maximum consensus possible.
September 17, 2006 Press Briefing by Rodrigo de Rato, IMF Managing Director |
| Question: There have been various calls here for the industrial countries to exercise self-restraint in terms of demanding shares commensurate at the IMF with the size of their own economies. Do you think that industrial countries, in particular those from Europe, are prepared to do that in the second phase? |
| Answer:
We have agreed on that principle set out in the communiqué. I think the next stage is the detailed consideration of the varied items about the shares themselves that you are raising. I believe that countries that are major shareholders in the IMF will approach this in a statesman-like way because we do wish to move the institution forward. We do wish to bring it up to date and, of course, the reform of the structure of the IMF makes possible also a greater engagement by members in the new work of crisis prevention. So, I am confident that the next stage of reforms will be approached in a statesman-like way by all countries wishing to see a positive outcome that recognizes the changing nature of the global economy and the size of members' economies, but also is aware that we need to do something to protect and enhance the participation and voice of low-income countries in the IMF as well.
September 17, 2006 Press Briefing by Gordon Brown, Chairman of the International Monetary and Financial Committee |
| Question: Regarding the income of the Fund, could you comment on ways in which the Fund is going to be financed in the future, given that there is a decreasing number of borrowers at the present time. |
| Answer:
I think you can again see in the communiqué that we heard from the Managing Director, and we looked forward to the development of proposals for more predictable and stable sources of finance, and that that is in the context of the budgetary position of the IMF where there are strict controls and disciplines on the spending of the IMF. We await the recommendations from Andrew Crockett and his group. I do not think, until we have these recommendations, that we are in a position to speculate about the changes that would be made. But the IMF is subject to the same discipline about its spending as any other organization that is involved in finance.
Let me add that already the Board has approved a budgetary framework in which not only nominal reductions but real reductions are going to take place in the next two years. So, there is already, I think, a very effective budgetary framework. Of course, we will keep making all the efforts to make the institutions more effective in the use of public resources.
September 17, 2006 Press Briefing by Rodrigo de Rato, IMF Managing Director, and Gordon Brown, Chairman of the International Monetary and Financial Committee |
| Question: Regarding multilateral consultations, will the IMF publish the results of this process in lengthy documents like Article IV publications? |
| Answer:
It is too soon to answer your question, because I think that the Executive Board will have to reflect on how we apply our usual roles to a multilateral consultation in which more than one country is involved. So I cannot answer your question today. I am sure that the participants will have a lot to say on that.
September 17, 2006 Press Briefing by Rodrigo de Rato, IMF Managing Director |
| Question: The increase of the ad hoc quota for China, India, Mexico, and Turkey, is an ad hoc increase, but does that mean that in the next year there could be another increase related to the revision of the new formula? |
| Answer:
What the Board has approved is a two-year program that will focus on some important aspects of governance. The movement will start with a correction of a third of the actual misrepresentation and misalignment for the most clearly underrepresented economies, each recognized by all members of the Board. But the most important part of the agenda is certainly to be able to move more forcefully with not only these four countries, but others. To do that, there is a consensus that we need a new formula. Once we have that, we will move into a second ad hoc increase and that, of course, will be in relation to which countries are more underrepresented by the new formula. Probably these four countries will still be underrepresented, but others will be also.
At the same time, and at the same level of importance, but also tightly tied in terms of calendar, basic votes will be reviewed in a way that will make low-income countries increase their voice in the institution.
September 15, 2006 Press Briefing by Rodrigo de Rato, Managing Director, IMF |
| Question: I would like to have your assessments on the fact that Brazil and other countries are complaining about the way the IMF intends to conduct their quota reform. |
| Answer:
I believe it is not only in the specific interest of Brazil but in the interest of all of Latin America, to make the Fund more responsive to emerging economies and low-income countries. I don't have any doubt about that.
And my very frequent interchanges of views with Latin American representatives and members of governments, and Brazilian ones in particular, make me believe that this is a shared view. I think that we are moving toward giving more dynamic economies a more important role to play in the institution, and many of those more dynamic economies are emerging economies.
September 15, 2006 Press Briefing by Rodrigo de Rato, Managing Director, IMF |
| Question: Could you be more explicit about the reform proposal regarding the Board's representation for Africa? Three countries are represented by two. In your two-year plan, what could this become? How could this be changed? |
| Answer:
The question of the number of chairs is not on the table. This is not a question that we have a consensus to discuss. But I think there is a clear consensus to see to it that the vote of the low-income countries be expanded and protected better, and secondly, that the chairs representing a large number of countries, as is the case of the Africa countries, need to be strengthened, not just regarding their physical and technical means, but also politically, so that there will be better representation of Africa in the Board.
September 15, 2006 Press Briefing by Rodrigo de Rato, Managing Director, IMF |
| Question: How confident is the IMF of getting an agreement on quotas in Singapore and what would be the mechanics of this agreement? |
| Answer:
We are very confident that the broad support that was manifested in the August 23 Executive Board discussion, which resulted in the Board sending forward the resolution to Governors, will similarly come through when Governors look at it, and we are very hopeful that we will be able to get the kind of broad support that will ensure that the quota and governance reform program is adopted. We have asked Governors for their vote on it with a closing time on September 18 at 4:00 p.m. in Singapore. So there won't be a need for a vote in the plenary because that will already have taken place. The exact requirement is that 85 percent of the votes have to be in favor of the resolution. That is what we need, and that is what we hope and expect to get.
September 7, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: How far does the plan go for a greater role in surveillance of currencies? Will this be adopted or decided in Singapore, or is it something that is an ongoing process? |
| Answer:
The work on surveillance is more of an ongoing work program. There are a number of things that are underway, which I have talked about in previous conferences. Where things are advancing enough we will report to Ministers on the progress that is being made on modernizing the Fund's surveillance function, on focusing it more on the kinds of issues that countries are now facing, particularly in terms of financial markets and exchange rates, looking more at spillover effects and also some of the multilateral dimensions of it. We're not seeking a formal endorsement in the sense of a Board of Governors' resolution, but it is a work program or a direction of travel. We think that having that discussion in the IMFC and having Ministers review it and commit to political endorsement and support would help us take that agenda forward in the way in which we have been asked to do from the Medium-Term Strategy itself.
September 7, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Can you tell us more about the Managing Director's proposals on quotas and voice? |
| Answer:
What the Managing Director is proposing is to present at the Annual Meetings in Singapore a two-year program of action, which will result in a substantive modernization of the governance of the Fund. It will likely include immediate increases in the quota of a few of the clearly most under-represented countries. That will take place immediately after the Singapore meetings.
He would also like the membership at Singapore to agree upon a set of measures that would be implemented over the next two years or so. That set of measures would include perhaps a further round of increases for other countries after a review of the formula that is used to calculate the economic weight of countries, which would then be used for this subsequent round of increases. In addition to these measures aimed at ensuring that countries' quotas are better aligned with their relative economic weights in the world economy, he would like to see a set of measures that would enhance the reputation and voice of low-income and small economies where the Fund has an active role. He thinks the most sensible way to do this would be by increasing the basic votes, which are the common votes that all countries have.
All of this was laid out in the Managing Directors August 3 speech in Tokyo.
August 3, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: The Managing Director is traveling a lot, discussing the medium-term strategy. What sort of feedback has he has received? |
| Answer:
The Managing Director has been traveling in connection with the implementation of the medium-term strategy (MTS). He has sought to get the perspective of different IMF members on issues within the strategy and the agenda going forward. This is particularly important in the run-up to our Annual Meetings in Singapore this September. Basically, the feedback on the implementation of the strategy so far has been very positive—in terms of providing both an overall framework, and a direction for the organization over the next few years. The strategy was welcomed enthusiastically by our membership in the Spring.
Now, the issue is moving forward on various elements of the strategy. In the immediate future, one of the elements that we are particularly focused on is strengthening our surveillance. The issue of multilateral consultations is one dimension of this. The Managing Director has been briefing national authorities and other groups, and getting their perspectives. Another area we're giving attention is developing a mechanism to better address crisis prevention for emerging markets, and here, there have also been some initial discussions. Finally, the other issue that we have focused on very much as we approach the Singapore meetings is how to move forward on the question of improving the governance of the institution—notably by addressing quotas and voice in the organization. Again, on this issue, we have had a lot of positive feedback, and very constructive suggestions on how to take things forward. This process is now underway.
July 6, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Can you share with us which country or area will be included in the current work on the multilateral consultations, and when this is happening? |
| Answer:
I would like to refer you back to our June 5 press release on the first multilateral consultations, and to remind you that on these first consultations, which focuses on the topic of addressing global imbalances, the five participating economies are China, the Euro Area, Japan, Saudi Arabia, and the United States. As we said in that press release, and as the Managing Director has said subsequently in a number of speeches, these economies were chosen for this particular multilateral consultation because they either have large current account deficits or surpluses, and because between them, they account for a large share of global output. So, their cooperative action can help to address the vulnerabilities that are inherent in the imbalances. They can also, through their action, help to go a long way towards ensuring that these vulnerabilities are addressed while sustaining global growth.
The other point I want to make is that the process of multilateral consultations has now effectively started. Discussions are underway with representatives of each of these economies. As I have said previously, our expectation is that these first multilateral consultations will take us through the end of 2006. There will eventually be a discussion in the IMF Board—so that all member countries can bring their perspective to bear on this issue.
July 6, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: How far along is the Fund with the issue of having a different approach to addressing the global imbalances, something that was highlighted at the Spring Meetings? |
| Answer:
I should say what we have done since the Spring Meetings. First, we are now clear that the first of these multilateral consultations indicates there is a particular need to focus on the question of the economic imbalances. Second, the process of how we are going to go about that is something that we are now discussing both with the potential countries that would be involved in it and we will be taking that to the Board. Third, about the timetable for this work and whether it can be completed by the time of the Singapore Annual Meetings, the Managing Director's view is that what is important is not whether this process is completed by September or October, but that it is done right. So, as far as we are concerned, this is a coordinated consultation process that affects a number of countries, addressing an issue took quite a long time to build up and that will take time to resolve. So, while we intend to make progress on this in the coming months, we do not see Singapore as a deadline of any kind for completing it. June 1, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: The Fund's medium-term budget was recently published. Is there anything in the budget that shows how the Fund is saving, considering the income position? Is there a shift towards more savings in any way, lessening some areas, increasing in others? |
| Answer:
On the substance of what is in the budget, the headline numbers are that we project that the budget is constant in real terms in the first year, and then there is a decline of one percent in each of the subsequent two years in real terms. Within that, substantial reallocations are planned to ensure that the elements of the medium-term strategy are reflected in the design of the budget, but there is also a commitment to deliver on that strategy over those periods within the overall budget. The rationale for it is simply that as a public institution, whether or not we have an income issue, we need to continually make sure that the money we spend provides value for money for our members.
June 1, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Could you explain how the new Committee of Eminent Persons is going to work that was set up to look at the options for ensuring long-term financing for the running costs of the Fund? And how does the new investment account to invest the Fund's current reserves fit in? |
| Answer:
The Committee of Eminent Persons was set up by the Managing Director to look at the full range of options available and make recommendations for sustainable long-term financing for the running costs of the Fund. The new investment account was one initial step, and the committee will look at other options to finance the running costs of the Fund—costs that pay for our core work of surveillance and technical assistance. To be clear about what the purpose of this committee is, it is not about how the Fund provides financing for its member countries; that is, the money that it actually lends to member countries. Those funds come from contributions from the membership, chiefly in the form of quotas, and the Fund's current lending capacity is at an all-time high of about SDR135 billion, which is nearly $200 billion. The committee is only now beginning to come together, and the we're going to work out in the coming days the specific modalities of how it's going to work. But the purpose of the committee is not to audit the running costs of the Fund. It is to look at the options of financing those running costs in a sustainable way over time. The committee is expected to report back to the Managing Director in the first quarter of 2007. May 18, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Can you comment on the IMF's own finances? Have you been able to find any places where you can actually save money in the IMF? |
| Answer:
Like all public institutions, whether we are short of money or whether we have adequate income, we have a responsibility to keep looking at our costs to make sure that those costs represent the most efficient way to deliver on the expectations of the membership. That includes not only expectations in terms of the substantive outcome, but also expectations in terms of good management and prudent management of public money.
May 18, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Is there already a short list of the countries whose quotas might be increased in the first phase of the strategic review proposed by the Managing Director? |
| Answer:
There is no short list of countries because the process of how we're going to move forward on the discussion of quotas and voice is only just starting. As you know, the International Monetary and Financial Committee (IMFC) asked the Managing Director, in consultation with the Executive Board and with the IMFC, to come forward with concrete proposals for agreement in September. Precisely how it will go forward if there are ad hoc increases, which countries would be the ones that would be part of that phase of ad hoc increases, what increases they would get, is work that has yet to be done. May 18, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: What exactly has the International Monetary and Financial Committee (IMFC) agreed on multilateral surveillance? |
| Answer:
The IMFC resolved on the recommendation of the IMF Managing Director that in future the IMF should be more able to address global questions with multilateral surveillance, like current account imbalances, the impact of oil prices and financial sector questions, and the IMF should monitor in future more deeply not just country policies but the linkages and spillover effects of one country's policies on others in the global economy. The committee agreed that members shared a general responsibility for global issues and mutual responsibilities to each other that should be reflected in our new approach to multilateral surveillance. Specifically, the IMFC agreed the IMF must focus more on crisis prevention, as well as crisis resolution; that multilateral as well as bilateral surveillance would become of increasing and central importance; and that we would agree an annual surveillance remit built on multilateral and bilateral surveillance of monetary, fiscal, exchange rate policy frameworks and financial sector issues. This annual remit will involve independence of the surveillance work, greater transparency and of course work by the Independent Evaluation Office. The IMF will start working immediately on how that multilateral surveillance process is going to be established. It will not only be a consultation process with some systemic countries, but it will involve, as the process evolves, the IMF Executive Board and the IMFC. April 22, 2006 Press Briefing by Rodrigo de Rato, IMF Managing Director, and Gordon Brown, Chairman of the International Monetary and Financial Committee |
| Question: Could you elaborate on the confidence that you have in the multilateral surveillance process to actually persuade the countries concerned to act on the spillovers and linkage problems that the IMFC referred to? |
| Answer:
The responsibility affecting governmental interaction is on governments, not international institutions. I think we can provide a framework in which consequences of actions can be seen more clearly, and also consequences of inaction. And, I think that to do that beyond the mere analysis and descriptions in the consultation process with governments will be extremely useful. As the IMFC communiqué emphasizes, that would also be done in consultation with the whole membership. So there is going to be a very transparent way of analyzing linkages and spillovers and risks—and solutions—that probably is going to teach us a new way of understanding international cooperation. This is a new instrument that the IMF is going to develop. It is new for us and going to be new also for the membership. And I think we're going to be learning about many things when we get this consultation with the specific governments and, at the same time, when we engage the whole international community on in it.
April 22, 2006 Press Briefing by Rodrigo de Rato, IMF Managing Director, and Gordon Brown, Chairman of the International Monetary and Financial Committee |
| Question: Has there been any progress on the issues of voice and representation? |
| Answer:
The International Monetary and Financial Committee (IMFC) agreed that to reflect changing times, voice, votes, and quotas should reflect the changing international economic weight of countries in the global economy. It reiterated that the IMF's effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, and it emphasized the importance of fair voice and representation for all members. The committee underscored the role an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy. It agreed on the need for fundamental reforms and called upon the IMF Managing Director to work with the IMFC and the Executive Board, to come forward with concrete proposals for agreement at the Annual Meetings in Singapore in September.
April 22, 2006 Press Briefing by Gordon Brown, Chairman of the International Monetary and Financial Committee |
| Reform of the IMF : archived questions and answers |