2002 Annual Meetings of the IMF and the World Bank Group

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September 28, 2002

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Transcript of the Annual Meetings Closing Press Conference
By Ahmed Macki, Chairman of the 2002 Meetings, IMF Managing Director Horst Köhler and World Bank President James D. Wolfensohn
International Monetary Fund
Washington, D.C., September 29, 2002

MR. DAWSON: Good afternoon, ladies and gentlemen. Welcome to the concluding press conference for the Annual Meetings of the IMF and World Bank. At my far right is James Wolfensohn, the President of the World Bank. To his left is Mr. Macki, the Chairman of the Annual Meetings and Finance Minister of Oman. And to my immediate right is Horst Köhler, Managing Director of the IMF. Minister Macki will start with a brief statement, followed by Mr. Köhler and then Mr. Wolfensohn, and then we will take a few questions. Thank you very much.

Mr. Chairman?

CHAIRMAN MACKI: Ladies and gentlemen, during our meetings Governors welcomed the commitments that were made at Doha, Monterrey, and most recently at Johannesburg where we committed ourselves to ensuring that we fulfilled the obligation we agreed. Our discussion covered a wide range of issues from poverty reduction, which remains one of our greatest challenges, to the uncertainties surrounding the global economy outlook and the ways the Fund and the Bank can continue assisting members to strengthen their economies to make them stronger and more resilient.

We emphasized that all of us, developed and developing countries alike, must continue to work together as partners if we are to continue making progress towards achieving the Millennium Development Goals.

I would like to express on behalf of all Governors our profound appreciation to the officials of the Fund and the Bank, as well as to the various law enforcement agencies from Washington, D.C. and the United States for their efforts to ensure our safety and well-being. I would also like to warmly thank the U.S. authorities for hosting our meetings this year and for their hospitality.

Thank you.

MR. KÖHLER: Good evening, ladies and gentlemen. The meetings, from my perspective, have been very productive and successful. The fact that 184 members of the Fund and the Bank come together in this quite uncertain world is important in its own right. We, of course, discussed a lot about the global economy, and I was encouraged because there was no doom and gloom discussion, but a differentiated analysis and some realistic confidence that the recovery will continue.

I would like also from my perspective to thank the U.S. government and District of Columbia for being so effective in hosting these meetings. And I would like to express a warm appreciation to the many men and women who have worked so hard all weekend to make it all possible, not least the security measures.

There is a broad consensus coming from this discussion that globalization has created unprecedented opportunities to improve the wealth of nations, and this expression came not least from the poor and emerging markets. But the members of the IMF and the World Bank are also aware of the challenges and risks that come along with it. They don't want less, but they want better globalization. We all agree that we must make a conscious and determined effort to invest in better globalization, to make it indeed work for the benefit of all.

What I took from these discussions from the membership is that the IMF is strengthened by its members. They want it to be involved in making globalization work for the benefit of all, and in the process the IMF has to be an open institution. It has to listen. It has to learn from dialogue and experience, and has to adapt to new questions and challenges. I am very encouraged by the clear endorsement of the broad process of reform that is underway at the Fund. But of course, there is still unfinished business. I will say a word later on this.

I was also encouraged that our membership wanted the Fund to stay engaged, to have a role in the fight against poverty. This is what we are doing in excellent, intensive cooperation with the World Bank, with the IMF concentrating on macroeconomic stability. Of course, the lead in the fight against poverty is with the Bank.

I have outlined in my statement today, and I got positive responses to these five key elements for further reform, and these elements I see in a context. One, we need to further improve surveillance and crisis prevention. Two, we need a better safety net to help countries stay the course of sound policies and reform in the face of adverse external shocks. Three, we need clearer and more predictable policies on access to IMF resources, including the fact that exceptional access which may be possible and needed remains exceptional. Four, we need a better mechanism for dealing with unsustainable sovereign debt. And here the Governors asked the IMF to consider the contractual and the statutory approaches further and to develop for consideration at the spring meetings a concrete proposal for the SDRM. It was an impressive endorsement and expression that we come up with this proposal at the spring meetings. And fifth, I also detected a willingness to consider, at the appropriate time, an increase in IMF quotas to ensure that the IMF continues to have the resources to be a confidence-building anchor for the international financial system. Here, of course, the views differ, but I sense some openness when the time is right.

The positive response I received from our members over the past few days makes me confident that the IMF is on the right track with this road map for our future work program, and this is also an excellent appreciation of the work of staff and the Executive Board of the IMF.

Thank you.

MR. DAWSON: Mr. President?

MR. WOLFENSOHN: Thank you. I can only echo the observations made by Chairman Macki and Horst Köhler, especially to thank the U.S. authorities, the District of Columbia authorities, and indeed Washington for putting up with us for this time, and I'm very, very grateful.

From the point of view of the World Bank, this has been a very positive meeting. I share Horst's sense of optimism about the future. Not wild optimism, not wild pessimism, but something in the middle. We've had a game to see how we can actually describe it. What did you call it?

MR. KÖHLER: On the one hand, a balance between no undue pessimism, but also no complacency. I think it was Minister Milan who said, cautious confidence and I turned it into realistic confidence.

MR. WOLFENSOHN: I thought you'd like to hear that because I agree, and I hope that you will all go out of here with a sense of enthusiasm.

I do want to say that we have been left with a number of things to do. The notion that we should move forward is, I think, accepted by everybody. That we stop philosophizing and actually get on with our respective tasks, the tasks both for the developed countries and for the developing countries, and that we reach out and try and do a better job in working with civil society and the private sector.

They've asked us to come back in April with a framework of managing and judging this, a set of indicators that they would like us to have. They've asked us to move forward on the coordination of our efforts, on the harmonization of our practices so that we're not all sending investigative committees, and we don't have different procedures. That we use our instrument in the global gateway, which is an information base that you can all find within the World Bank net, where some 400,000 projects are already listed, 63,000 of them current. So just the numbers alone make us realize and made our Ministers realize that there is a big job to do in bringing us all together.

I was very happy that they also wanted us to move forward with the fast track on Education for All, on the work we're doing on AIDS, the work we're doing in community-based development on water. And I was also pleased that they have asked us to, us and the Fund, to take a look at the issue of representation on the board by some of the less rich countries to ensure that we give consideration to that subject.

So all in all, it was a very useful meeting. It was very quick but very useful, and I just endorse what my colleagues have said.

MR. DAWSON: Thank you. And now I think we have time for about three questions. Right here. We may go to four.

QUESTIONER: Question for Mr. Köhler about Japan and the Bank of Japan and the proposals for buying shares. Before the meetings, a lot of people were very cautious, wanted to know more before forming any opinion. I wondered now that you've had the meetings and a chance to talk to a lot of Japanese officials about it, what's your assessment both of the Bank of Japan's proposal for buying shares and more widely for the Japanese economy?

MR. KÖHLER: First, I do think that it was very useful that the Japanese finance minister and Governor Hayami made the presentation and informed colleagues and also the IMFC about the discussion in Japan. And after this I have a bit more positive assessment of this decision to buy stocks because it is, as I see it now, better—indeed, part of a more comprehensive package of measures where, in particular of course now, the awareness that they have to do something in order to get rid of non-performing loans is clear existing. And the Bank of Japan with its decision to buy stocks contributed to this sense of urgency.

Then it is also clear that they are working on tax reform which could have a positive impact on investment and demand. This is also positive. So I am encouraged after these meetings and I expect Prime Minister Koizumi to outline the full package in the coming weeks.

QUESTIONER: First, Mr. Wolfensohn, regarding the move from theory to implementation, has there been any concrete decision made on what action will be implemented that we can expect in the very near future; and secondly, the issues of transparency—many of the African nations in particular expressed that although in theory in agreement with the idea, there is a problem associated with how it is implemented regarding particularly post-conflict countries who may not follow the same type of methodology or procedures that are outlined in the one-size-fits-all theory, if you would. So if you could elaborate on that somewhat and tell us what can we expect in the implementation phase that you feel confident with moving toward, and the issue on transparency.

MR. WOLFENSOHN: Let me respond to the first question on what can you expect. There is a great deal that's already going on, so it's not as though we are now starting work on development. What we're talking about here is taking a look at how we can, together, focus on the Millennium Development Goals. Most of us have looked at projects and programs, and the step that we are now trying to take, which is what we are addressing, is the question of how you get all the donors, the civil society and the private sector to come together with the government of the country and the citizens to try together to approach the Millennium Goals.

That is very different from approaching a single project. So in the Education for All, we're taking a group of countries, and we're saying how do we over a 10-year period, for example, get them to achieve their education goal, and we are starting with three initiatives—one on education, one on water, and one on AIDS.

And on the second question, there isn't a one-size-fits-all strategy, so we're not trying to fit something into it. In the post-conflict situation—and two of the countries today spoke—East Timor and Afghanistan—we have had a country-by-country approach, and in the case of Bosnia-Herzegovina that also spoke today, it's clear that what we did for them has borne results. So I think we understand what we're doing in post-conflict countries.

QUESTIONER: Sir, in view of some of the corporate scandals we have had here, like at Enron, WorldCom, and other companies, and the decline in the U.S. stock market, particularly some bank stocks, what effect if any is this having on the World Bank and IMF and lending policies?

MR. KÖHLER: Well, it has a great effect, because here was quite an intensive discussion about the need to improve corporate governance; there was a welcoming of swift action including legislative action by the U.S. Administration, and there was also agreement that, for instance, accounting rules should be harmonized at the international level, and the IMF is, together with the World Bank, considering how we work further with our members on defining a standard and code regarding corporate governance which we would then be able to discuss with all our membership. So there is a momentum to pursue it all over our membership.

QUESTIONER: You suggested, Director Köhler, that there is a consensus in developing a mechanism to work out sovereign debt issues or, for example, the insertion of collective action clauses. But two major emerging markets expressed doubt toward the establishment of such measures. Mexico said it had no plans to introduce it, thought it would increase the cost of debt issuance for borrowers; and Brazilian Central Bank Governor Arminio Fraga said that the market is better able to work out these sorts of problems. I am wondering how much influence positions such as these will have in the development of the mechanism or such a mechanism and whether one is inevitable. Thank you.

MR. KÖHLER: Well, I didn't say there is a consensus; I said that the IMFC asked the IMF to work further on the collective action clauses in debt instruments, and on putting forward a concrete proposal for consideration at the IMFC at the Spring Meetings. So that is clearly an endorsement of this idea and the work process. It is not yet a consensus about the specifics of the concrete solution.

I think I am not surprised about some skepticism in the details, because of course, from the view of emerging market countries, they could consider or could fear that that has an additional cost. And of course, we need also to work on further details of the sovereign debt restructuring mechanism. Often, the devil lies in the details, so that it is still a work process, and nothing is yet decided, but I take from these discussions here that there is a broad understanding about the absolute need to have a better mechanism for timely, orderly, less costly possibility in order to restructure debt in case debt is not sustainable. And we'll do it without any, say, rush; we will do it very careful, very professional. We will have further talks with emerging market countries' representatives, with the private sector, with experts, so that it is really a further work process.

But I do think it is a kind of breakthrough here as a recognition that there is a gap in the international financial architecture and that the international community is well-advised to work professionally, as I said, to close this gap.

MR. DAWSON: Thank you very much. We'll see you either in the spring or in Dubai.

[Whereupon, at 5:53 p.m., the press conference was concluded.]




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