Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund
October 2, 2004

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Transcript of the Closing Press Conference of the 2004 Annual Meetings of the Boards of Governors of the International Monetary Fund and World Bank Group
With Mr. Hng Kiang Lim, Chairman of the Boards of Governors and Minister of Trade and Industry from Singapore, Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund, Mr. James Wolfensohn, President of the World Bank Group, and Mr. Thomas C. Dawson, Director of External Relations at the IMF
Washington, D.C., October 3, 2004

Webcast

MR. DAWSON: The press conference will be led off by Minister Lim of Singapore, the Chairman of this year's Annual Meetings, followed by Managing Director de Rato and then Mr. Wolfensohn, and then we will go ahead and take a few questions.

Mr. Chairman?

MR. LIM: Thank you.

Ladies and gentlemen, welcome to the press briefing. The Governors had a very productive session at our Annual Meetings this year. We discussed a number of issues critical to the global economy. These included our forecasts for broad-based global growth, an assessment of oil-market volatility. With regard to developing countries, we had a discussion on the critical issues associated with meeting the Millennium Development Goals and modalities for support and concessional assistance from the developed countries.

We also had an exchange of views on the need to consider issues of voice and representation at the IMF and World Bank. We welcomed progress on trade liberalization under the Doha Development Round. Finally, we supported the IMF Strategy Review of its direction, and encouraged both the IMF and the World Bank to pursue programs that lead to strong results for all our constituencies.

Thank you.

MR. DAWSON: Managing Director?

MR. DE RATO: Thank you, Chairman.

Just very briefly, because I think that what the Chairman has said, it's the bulk of what we've done. I just want to say that all our members have coincided with us that this is a strong moment of the world economy in 2004, followed by a promising year of 2005; that the world has become more resilient to external shocks, and that that is explained by the strengthening of macroeconomic policy and also by the role of these two institutions helping governments to strengthen their macroeconomic and microeconomic policies.

Looking forward, certainly, there has been a great coincidence between members with respect to the need to take advantage of the recovery to tackle some of the short-term risks but also the medium-term ones, like the aging of the population. And certainly, many Governors have referred to the balances of the world economy and the impact of oil prices.

Regarding our work in the IMF, I think that the definition of surveillance as shared economic security by the Governor of the Bank of Finland, Mr. Liikanen, is a very good definition, and certainly, I feel that all Governors have expressed their confidence in the Fund and the ability of the staff to bring about the responsibilities both in surveillance, technical assistance, and financial programs.

I want just to underline that regarding our policy in low-income countries and the need for the increase of aid to those countries, there's been very fruitful discussions, both formal and informal moments, and I hope these discussions will bring about the need for a political consensus that certainly is needed for that. That also is the case for the increase of aid and the definition of a political framework to arrive to an agreement in the voice and representation in the Bank and the Fund.

The Chairman has referred, which is also one of the topics of our discussions, to the need for an agreement in the multilateral trade liberalizations, which, from the Fund, we consider an essential step for the sustainability of the recovery.

Thank you very much.

MR. DAWSON: Mr. President?

MR. WOLFENSOHN: I think there's virtually nothing to say in addition to those two statements with which I agree, other than that there is quite a lot of attention given to the replenishment of IDA14 both from the people who need the money and some discussion with the people that I hope will give the money. And as you know, it's very important that that be filled in the coming months and is a preoccupation on the mind of us at the Bank as well as our clients.

MR. DAWSON: Thank you.

Now, we have time for maybe four questions or so.

QUESTION: A question, really, is to Mr. de Rato. This afternoon, Lawrence Summers, giving the Per Jacobsson Lecture, suggested that the problem of the U.S. current account deficit and the current account imbalances needed an urgent, coordinated solution, and he suggested that the G7 is not the appropriate forum to do it but that it should be done primarily through the G20. Would you like to comment on that, your views on that, please?

And also, to Mr. Wolfensohn, the IFF, the Japanese Finance Minister was quite dismissive, one may say, of the chances of that ever getting off the ground, and how do you feel now after these discussions of the chance of the International Finance Facility actually coming into being?

MR. DE RATO: Well, I think that referring to the current account imbalances, I have given my opinion all this week, but I am, at the end of the week, giving it again. I think that it needs corrections and actions in some countries, especially the big, developed economies. Certainly, in the case of the U.S., we see clearly that the fiscal policy has to be more ambitious and establish a shorter framework of reduction in the public deficit.

We certainly see a need for structural reform in Europe to take advantage of the recovery this time that was missed the last time. And certainly, we see the need for continuing structural reforms in Japan and then a change in their macroeconomic stance once deflation will be rooted out.

Also, actions in other areas of the world, certainly bigger flexibility in exchange rates in some Asian countries is needed, but certainly the bulk of the effort has to be done in the three countries I mentioned before.

QUESTION: [off-mike].

MR. DE RATO: Well, you asked me my opinion, and I gave you my opinion. If you want somebody's opinion, you already have it, so you have two opinions.

[Laughter.]

MR. WOLFENSOHN: And the answer on IFF is that I think we'll get a test of whether it works in the coming few weeks when there will be an IFF-type issue in relation to GAVI, the Global Vaccine Initiative, and that will prove the concept, and then it is a question of how many people would wish to join it. So, I think you have a very important test coming up with that, and there seems to be quite some interest, so I suggest you wait a few weeks, and you'll see how it works, and then the politics are how many people wish to join that initiative?

QUESTION: I have a rather parochial question for Mr. Wolfensohn and Mr. de Rato. One hears in talking with delegates that there's a fair amount of dissatisfaction with Washington as a venue for these meetings because of all the security problems and the fact that the meetings have to be compressed into a short period of time. Are you giving any consideration to having more of the meetings—I mean, I know you already have one of three outside of this country, but are you giving any consideration to having more of them outside of Washington?

[Laughter.]

MR. WOLFENSOHN: It's your building.

MR. DE RATO: This one is my building? Okay.

MR. WOLFENSOHN: I agree with Mr. de Rato.

[Laughter.]

MR. DE RATO: First of all, I want to thank the District of Columbia and certainly the citizens of the city for the effort it represents for all of them that we have these meetings here. I know that for some citizens on Friday, probably more importantly, there's been a disruption of traffic and probably of interests of citizens, so I want to thank them in the name of Mr. Wolfensohn and myself.

And then, right now, I cannot give you an answer in that respect. I think that the hospitality of the city and the U.S. Government has always been a tradition here. There are certainly some problems of security. I think that not only management but also the Board will work on that, but I have to say that today, the only thing I can say is thank you to both the citizens and the authorities of both the city and the country.

MR. DAWSON: Any other questions? Second row.

QUESTION: Thank you. Over the weekend, the International Institute of Finance has published a report strongly critical of the Russian Government, and they said that they are hitting the investor confidence. I wonder if Mr. de Rato shares this opinion and you have the feeling that the investor is suffering by the Russian actions in Yukos and in other companies.

Thank you.

MR. DE RATO: First of all, as I had the chance to talk to the Russian authorities, and also the staff has done it, we think that the Russian economy right now is needing of tightening monetary policy, and certainly has a very important challenge in addressing the banking restructuring, which I have to say that the government is doing. And certainly, questions of governance and transparency are central to all countries and in particular to any one that you want to mention—Russia, too.

I have expressed the need to guarantee that transparency and an equal treatment to all investors.

QUESTION: I get the impression that while there is a clear willingness to do something about more money for developing countries, there isn't yet an agreed willingness to do something about voice for developing countries in the institutions; is that a fair summary?

MR. WOLFENSOHN: I think it's fair to say that the issue is still under discussion. As Mr. de Rato said earlier, it's not something that he and I can decide; it is a political decision made by the shareholders, and we are trying to give them all the support possible. And at some pace, it's going ahead, but I think that the debate is engaged, and I hope it will be resolved before too long.

MR. DAWSON: Two more questions.

QUESTION: On the question of increase of the voice of the developing countries and quota on the basis of PPP, I was wondering whether, as in the case of Security Council expansion, something that not only everybody agrees, but nobody will agree to move forward.

MR. DE RATO: Well, as Mr. Wolfensohn just said, this is a question in which what we can provide the member countries is with technical calculations, and we can, of course, make many of them, but at the end, it will be a political decision if the countries want to move forward. I have to say that as I said today in my speech, I believe this is a very important issue that affects the legitimacy of the institution in the medium-term but, of course, has to be addressed by the shareholders, and it needs a political consensus.

Some of the very important issues, which are not strange, are pending on political consensus. One is this, the other is the increase of aid, which I think that during this weekend we have had very important discussions about it, and I think that there is a basis for it, but at the end it will also be a question of political decision, country by country.

And certainly, the trade issue, which, of course, also both Mr. Wolfensohn and myself have referred to it and the Chairman have referred to it in various occasions are issues of a different degree of importance, maybe, but certainly a very important issue of them that governments make political decisions and probably look for consensus.

MR. DAWSON: Last question.

QUESTION: Since in the past, the CCLs existed at the IMF as instruments of theoretical prevention of crisis, the existence of new instruments would be just a matter of technicalities to be solved, and if so, which would be the biggest technicalities to solve?

MR. DE RATO: No, I don't think it's a question of technicalities. I think that, first of all, the Fund already has some precautionary arrangements. To define the new modalities of it, it will be a question of how we define our surveillance looking into the future, so it's part of our strategic review.

At the same time, of course, specific cases will come at specific times, and it's not only the tradition but also the responsibility of the institution to solve the specific cases when they come, and we will address the needs of our members like we have done in all of our history.

MR. DAWSON: Thank you very much.




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