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Finance & Development
A quarterly magazine of the IMF
March 2002, Volume 39, Number 2

In brief

Johannesburg summit 2002

The international community is gearing up for the next in a series of key global conferences to be held this year to focus attention on the need for faster progress toward achieving the Millennium Development Goals—an ambitious agenda for improving living conditions for the world's poor by 2015, set forth at the UN Millennium Summit in September 2000. The World Summit on Sustainable Development, to be held from August 26 to September 4 in Johannesburg, South Africa, and organized by the UN Commission on Sustainable Development, will bring together world leaders, numerous citizen activists, and business representatives to work on a full development agenda for conserving natural resources and improving people's lives globally.

Ten years after the 1992 Earth summit in Rio, the Johannesburg summit aims to decide on concrete policies and set quantifiable targets for better implementing Agenda 21—which the international community adopted at the 1992 Rio summit as a global plan of action for sustainable development. UN Secretary General Kofi Annan recently identified clean drinking water, energy, health, agriculture, and biodiversity as five priority areas for achieving concrete results at the Johannesburg summit.

The Johannesburg summit follows another critical global conference this year. The Financing for Development Conference held in March in Monterrey, Mexico, provided a forum for forging a global partnership to mobilize resources for development.

Technical assistance for Africa

The biggest obstacle encountered by African economies striving for sustainable growth often is not lack of political will but lack of capacity. As part of its commitment to help African countries promote growth and reduce poverty under the New Partnership for Africa's Development (NEPAD), the IMF will set up African Regional Technical Assistance Centers (AFRITACs) in Abidjan and Dar es Salaam. The new AFRITACs, which will begin operating later this year under agreements signed in April by IMF Managing Director Horst K�hler with Presidents Laurent Gbagbo of C�te d'Ivoire and Benjamin Mkapa of Tanzania, are intended to help West and East African countries build local capacity for economic and financial management.

At the AFRITACs, a locally based team of IMF resident experts and short-term specialists will provide technical assistance, and training will be offered through workshops and courses. Working closely with the World Bank, the African Development Bank, and donors, the IMF will provide assistance primarily in the areas of its core expertise—including macroeconomic policy, tax policy and revenue administration, public expenditure management, financial sector policies, and macroeconomic statistics.

As part of this initiative, the IMF will become a member of the African Capacity Building Foundation (ACBF), the implementing agency for the Partnership for Capacity Building in Africa (PACT). The PACT was set up by African governments and their development partners in 1999 to increase capacity building across the continent.

The first two AFRITACs will be modeled on the IMF's technical assistance centers already operating in the Pacific and the Caribbean. Three more AFRITACs may be created, pending a positive evaluation of the Abidjan and Dar es Salaam centers after their first 18 months of operation.

East Timor to join IMF

On May 20, 2002, East Timor formally gained its independence, following hundreds of years of colonial rule, a 24-year annexation, and 2 1/2 years of transitional administration under the United Nations. In anticipation of this event, in late March, the Second Transitional Government of East Timor filed an application for IMF membership. The IMF's Executive Board then submitted to the IMF's Board of Governors a draft Membership Resolution containing recommendations on the amount of quota for East Timor, the form of payment of its subscription, and other customary terms and conditions of membership. The Board of Governors adopted the Resolution on May 29, setting the stage for East Timor to become the one hundred eighty-fourth member.

Given the relatively small size of its economy and external trade flows, East Timor will be one of the IMF's smaller members, with an initial quota of SDR 8.2 million (notwithstanding the anticipated growth of the economy once oil and gas revenues come on stream over the next few years).

East Timor was devastated by widespread violence carried out by pro-Indonesian forces following the August 1999 referendum, in which an overwhelming majority of the East Timorese people voted for independence from Indonesia. Subsequently, a peacekeeping force restored order, and East Timor was brought under the authority of a United Nations Transitional Administration. During its transition to independence, East Timor received considerable support from the United Nations, the IMF, the World Bank, and the international donor community for its efforts to rebuild its economy and infrastructure. Donors have pledged to continue providing grant aid to the country, particularly until the prospects of substantial oil and gas revenues from reserves in the Timor Sea materialize.

East Timor's IMF membership will facilitate its entrance into other international financial institutions and will accelerate its integration into the global economy. The IMF plans to continue supporting East Timor in meeting its postindependence challenges. Such support will take the form of continued technical assistance in institution and capacity building, training, and policy advice in support of sound macroeconomic management. The IMF will also continue to work with the World Bank and the rest of the international donor community to mobilize financial support for East Timor's budgetary and development needs.