Concluding Remarks by Michel Camdessus
October 12, 199595/15
Managing Director of the International Monetary Fund
at the Closing Joint Session of the Annual Meetings
the Board of Governors of the Fund
Washington, D.C. October 12, 1995
Mr. Chairman, Governors: first let me congratulate Jim Wolfensohn on the great debut that we all feel he has made at these meetings. I have been impressed by the broad agreement shown at these meetings on the opportunities and challenges that globalization presents for our countries and the IMF. I have not perceived here the fears I alluded to in my oppening remarks. And I have been impressed by the broad agreement on the strategies we need to implement.
I have found it especially heartening to hear again how the Mexican crisis has not dented but, if anything, reinforced, the world-wide appreciation that countries need outward-oriented and market-oriented strategies to foster sustainable growth. The Governor for Brazil, speaking on behalf of Mexico and the other countries of Latin America, remarked on how the reversal of capital flows that followed the events of December did not lead to any slackening in the pace of adjustment and reform in those countries: "on the contrary," as he said, these policy efforts "gained new momentum and strength." What a welcome and promising response to that difficult challenge! And an impressive demonstration of the increased confidence of these countries in their economic progress--confidence that is well-based. And the Governor for India remarked on how developing countries all over the world continue to be engaged in "an unprecedented restructuring of their economies and policies to take advantage of the possibilities offered by our increasingly integrated world markets."
Many Governors emphasized that they fully appreciate the new challenges that globalization is presenting for them. The Governor for Indonesia remarked that the globalization of financial markets has meant that his country and other developing countries are being affected by events that only a few years ago would probably have had little impact on them. This, indeed, is our new world: as President Clinton put it, "in the global economy of the 21st century, we are all neighbors."
All Governors emphasized their commitment to macroeconomic discipline that is called for now, more than ever, by our globally integrated economy.
But, Governors, you all agree that this is not enough. Mr. Chairman, as you said in your opening remarks, globalization "underscores the need for global partnership," and this points to the roles of the Bank and the Fund.
I am gratified by the clear endorsement by Governors of the steps we have taken to make surveillance more effective for all countries. I have noted the importance that most of you attach to improving the provision of data to the Fund and also to the standards that we shall soon be finalizing on the publication of statistics. Of course, whatever we do--Fund staff and management--cannot be sufficient by itself to ensure more effective surveillance. As you said, Mr. Chairman, "The effectiveness of Fund surveillance ultimately depends on the willingness of members to cooperate with the Fund." That is indeed a key point. We rely on the cooperation of our members to help us achieve the stronger surveillance that all countries are seeking.
We shall also need your active cooperation to bring to fruition the initiatives to strengthen the Fund's resources and its ability to help the poorest countries. Here there is an unfinished agenda, which will form an important part of our work program in the months ahead.
As the Governor for the United States observed, "the increased size and speed of financial flows mean that resources required to address future challenges may be much greater than anything now available." Many Governors have emphasized again that the Fund is a quota-based institution, and that a substantial increase in quotas is needed. A number of you have expressed your agreement that a doubling of quotas is justified and necessary. And you have shown that there is a strong consensus among the membership that we must move ahead speedily with this review. We will report to the Interim Committee next April on further progress. And, as the Governor of Belgium has said, let us aim to reach agreement on the review in 1996. In addition, the need for a doubling of the GAB is agreed; and we look forward to an early resolution of the outstanding issues through a constructive dialogue between the G-10, potential new participants, and the IMF.
Governors: your endorsement of the strengthening of Fund surveillance and the strengthening of the Fund's resources will support the first two legs of the strategy I set out on Tuesday. But it is the third leg of the strategy that gives full meaning to the other two, since it is by helping the integration of the poorest countries into the world economy that we allow globalization to develop its effects positively for the entire world and demonstrate that it has the potential to serve the togetherness and effective solidarity of nations, so allowing, I quote, "the promotion and maintenance of high levels of employment and real income and...development of the productive resources of all members as primary objectives of economic policy." These words, as you know, are not those of a generous governor, but the very words of our founders in Article I of our Articles of Agreement. In very concrete words, this points, inter alia, to the major importance of the Fund's resolving the issue of financing of the interim ESAF in the next few months. No one questions the effectiveness of ESAF, the Fund's key instrument for helping our poorest member countries achieve the growth that they need. Its financing for the period before it becomes self-sustaining must now be secured. We will also be collaborating closely with the World Bank to consider what more might be done for the small number of highly indebted poor countries whose debt to the multilateral institutions may not be sustainable.
Two days ago, Jim Wolfensohn pointed out how "bitterly ironic" it is that just as we are reaching a consensus on how to address the challenges of our changing world, the threat to development assistance is so great. I fully concur with that. I was most encouraged by President Clinton's remark that it is not necessary for the United States to walk away from its commitment to IDA to balance its budget. The same applies to all providers of ODA. There is no better investment for these countries to make in their future than to maintain and allocate effectively, in close partnership with the Bretton Woods institutions, a higher share of their national resources to concessional assistance for the poorest countries.
Mr. Chairman: in the past year, we have seen a vivid illustration of the perils of the 21st century. We have learned from the Mexican crisis. Let us now move forward with determination and solidarity to complete the agenda we have been discussing, and to ensure that the Fund is fully equipped to help your countries face the challenges of our new world.
(Delivered in French) Mr. Chairman, allow me to congratulate you on the skill and enthusiasm with which you have perfromed your tasks. And let me say how much I am looking forward to visiting Benin in the next few days.
Thank you very much.