## Chapter XIII. The audited financial statements for the year ended April 30, 1998 of the General

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### Audited financial statements and transmittal
- The audited financial statements for the year ended April 30, 1998 of the General Department, the SDR Department, accounts administered by the IMF, and the Staff Retirement Plan and the Supplemental Retirement Benefit Plan are presented in Appendix IX.
- Letter of transmittal signed by Michel Camdessus, Managing Director and Chairman of the Executive Board.

### Senior management and executive leadership
- Managing Director and Chairman of the Executive Board: Michel Camdessus
- First Deputy Managing Director: Stanley Fischer
- Deputy Managing Directors: Alassane D. Ouattara, Shigemitsu Sugisaki
- Personnel changes (notes):
  - Effective August 1,1998, Stephen Pickford replaced Gus O’Donnell.
  - Effective July 1,1998, ZHANG Fengming replaced HAN Mingzhi.

### Executive Board and senior officers (selected entries as presented)
- Executive Directors and Senior Officers (selected):
  - Michael Mussa — Economic Counsellor
  - K. Burke Dillon — Director, Administration Department
  - Evangelos A. Calamitsis — Director, African Department
  - Hubert Neiss — Director, Asia and Pacific Department
  - Michael C. Deppler — Director, European I Department
  - John Odling-Smee — Director, European II Department
  - Shailendra J. Anjaria — Director, External Relations Department
  - Vito Tanzi — Director, Fiscal Affairs Department
  - Mohsin S. Khan — Director, IMF Institute
  - François P. Gianviti — General Counsel, Legal Department
  - Paul Chabrier — Director, Middle Eastern Department
  - Manuel Guitián — Director, Monetary and Exchange Affairs Department
  - Jack Boorman — Director, Policy Development and Review Department
  - Michael Mussa — Director, Research Department
  - Reinhard Munzberg — Secretary, Secretary’s Department
  - Carol S. Carson — Director, Statistics Department
  - David Williams — Treasurer, Treasurer’s Department
  - Claudio M. Loser — Director, Western Hemisphere Department
  - Massimo Russo — Special Advisor to the Managing Director
  - Warren N. Minami — Director, Bureau of Computing Services
  - Patrice Guilmard — Acting Director, Bureau of Language Services
  - Lindsay A. Wolfe — Director, Office of Budget and Planning
  - Eduard Brau — Director, Office of Internal Audit and Inspection
  - Kunio Saito — Director, Regional Office for Asia and the Pacific
  - Christian Brachet — Director, Office in Europe (Paris)
  - Alan A. Tait — Director and Special Trade Representative, Office in Geneva
  - J.B. Zulu — Director and Special Representative to the UN, Office at the United Nations
  - David M. Cheney — Chief, Editorial Division

### Governance structures and functions
- Board of Governors
  - Composed of one governor and one alternate governor for each member country.
  - The governor is appointed by the member country and is usually the minister of finance or the governor of the central bank.
  - All powers of the IMF are vested in the Board of Governors.
  - The Board of Governors may delegate to the Executive Board all except certain reserved powers.
  - The Board of Governors normally meets once a year.

- Executive Board
  - Responsible for conducting the day-to-day business of the IMF.
  - Composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman.
  - The Board usually meets several times each week.
  - The Executive Board carries out its work largely on the basis of papers prepared by IMF management and staff.
  - In 1997/98, the Board spent more than half of its time on member country matters (Article IV consultations and reviews and approvals of arrangements) and most of its remaining time on policy issues (such as the world economic outlook exercise, developments in international capital markets, the IMF’s financial resources, surveillance, data issues, the debt situation, and issues related to IMF facilities and program design).

- Interim Committee of the Board of Governors on the International Monetary System
  - An advisory body made up of 24 IMF governors, ministers, or other officials of comparable rank, representing the same constituencies as in the IMF’s Executive Board.
  - Normally meets twice a year, in April or May, and at the time of the Annual Meeting of the Board of Governors in September or October.
  - Responsibilities include advising and reporting to the Board of Governors on issues regarding the management and adaptation of the international monetary system, including sudden disturbances that might threaten the international monetary system, and on proposals to amend the Articles of Agreement.

- Development Committee (the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries)
  - Composed of 24 members—finance ministers or other officials of comparable rank—and generally meets at the same time as the Interim Committee.
  - Advises and reports to the Boards of Governors of the World Bank and the IMF on all aspects of the transfer of real resources to developing countries.

### The Asian Crisis — Origin and evolution
- Crisis broke out in July 1997 in Thailand and subsequently spread to other Asian economies; global consequences continued after the end of the financial year.
- Led to unprecedented demands on IMF time (Executive Board, management, staff) and to a record level of IMF lending in 1997/98.
- Prompted creation of the Supplemental Reserve Facility (established December 1997).

### Impact on IMF lending, resources, and liquidity (1997/98)
- Member countries drew SDR 19.0 billion ($25.6 billion) from the IMF’s General Resources Account in the credit tranches during the year.
- IMF approved nine new Stand-By Arrangements, with total commitments of SDR 27.3 billion.
- IMF approved four new Extended Arrangements, with total commitments of SDR 2.8 billion.
- Eight new ESAF Arrangements approved with commitments totaling SDR 1.7 billion.
- As of April 30, 1998:
  - 14 Stand-By Arrangements were in effect.
  - 13 Extended Arrangements were in effect.
  - 33 ESAF Arrangements were in effect.
  - Total IMF credit outstanding rose to a record SDR 56 billion ($75.4 billion).
- Comparative prior-year figures:
  - As of April 30, 1997, total IMF credit outstanding was SDR 40.5 billion ($55.3 billion).
  - As of April 30, 1997, SDR 1 = $1.36553.
- Net uncommitted usable resources declined to SDR 22.6 billion at end-April 1998 from SDR 43.5 billion a year earlier.
- IMF liquidity indicators as of April 30, 1998:
  - Liquidity ratio fell to 44.8 percent from 120.5 percent a year earlier.
- Quotas:
  - In January 1998, Board of Governors adopted recommendation to increase total IMF quotas by 45 percent (to SDR 212 billion from SDR 146 billion) under the Eleventh General Review of Quotas. The increase will take effect after members having not less than 85 percent of total quotas as of December 28, 1997, have consented.

### Appropriate policy response and institutional reforms
- Creation of the Supplemental Reserve Facility to provide additional assistance to members facing exceptional balance of payments difficulties attributable to a large short-term financing need resulting from a sudden and disruptive loss of market confidence (established December 1997).
- Executive Board work led to intensified efforts to strengthen IMF surveillance, financial resources, and the architecture of the international monetary system.
- Executive Board identified imperatives for strengthening the international monetary system:
  - improving international and domestic financial systems;
  - strengthening IMF surveillance further;
  - promoting wider availability and greater transparency of information regarding economic data and policies;
  - reinforcing the central role of the IMF in crisis management; and
  - introducing more effective procedures for involving the private sector in forestalling or resolving financial crises.

### Surveillance: lessons, guidance, and transparency
- Five lessons from preliminary March 1998 review of implications for IMF surveillance:
  - effective surveillance depends critically on the timely availability of accurate information;
  - the focus of surveillance must extend beyond short-term macroeconomic issues while remaining appropriately selective;
  - surveillance at the country level should pay more explicit attention to policy interdependence and contagion risks;
  - the crucial role of credibility in restoring market confidence underscores the importance of transparency; and
  - effective surveillance depends fundamentally on the willingness of members to take the IMF’s advice.
- July 1997: Executive Board adopted guidelines clarifying the IMF’s role in governance issues:
  - calls for more comprehensive treatment of governance issues within IMF purview in Article IV consultations and IMF-supported programs;
  - evenhanded treatment of members;
  - enhanced collaboration with other institutions, notably the World Bank.
  - IMF contribution areas identified: improving management of public resources; supporting a transparent and stable regulatory environment conducive to efficient private sector activities.
- Interim Committee (April 1998) adopted the Code of Good Practices on Fiscal Transparency: Declaration on Principles to enhance accountability and credibility of fiscal policies.
- December 1997 Executive Board review found scope for improvement in members’ provision of data for surveillance and recommended complementing core indicators with data on:
  - reserve-related liabilities;
  - central bank derivative transactions;
  - private sector external debt; and
  - prudential banking system indicators.
- Data dissemination framework endorsed by Executive Board:
  - Special Data Dissemination Standard (established March 1996) for countries that have or might seek access to international financial markets;
  - General Data Dissemination System (approved December 1997) for all member countries.
- Transparency initiative: Press/Public Information Notices (PINs) introduced May 1997 to summarize Executive Board assessments following Article IV consultations. Of 136 Article IV consultations in 1997/98, 77 resulted in PINs.

### Role of the international community and capital account liberalization
- Annual Meetings (Hong Kong SAR, September 1997): Interim Committee issued Statement on the Liberalization of Capital Movements Under an Amendment of the IMF’s Articles of Agreement; invited Executive Board to complete work on proposed amendment to make liberalization of capital movements one of the IMF’s purposes and to extend IMF jurisdiction as needed.
- Executive Board sponsored a high-level seminar (March 1998) to solicit outside views.
- Interim Committee (April 1998) noted provisional agreement on the amendment concerning the IMF’s purposes and asked the Board to continue work on policy issues aiming to submit an appropriate amendment as soon as possible.

### Early lessons and policy emphases
- Surveillance must:
  - obtain timely accurate information;
  - incorporate governance, transparency, and financial-sector vulnerabilities;
  - address policy interdependence/contagion; and
  - emphasize credibility.
- Strengthened IMF–World Bank collaboration is critical to coordinate macroeconomic analysis and sectoral financial recommendations and to promptly identify emerging financial sector problems.

### Country programs and program evolution (Thailand, Indonesia, Korea)
- Chapter includes detailed treatments of Thailand, Indonesia, and Korea (sections and tables referenced in contents):
  - Thailand — page 27; selected economic indicators Table 4, as of July 23, 1998.
  - Indonesia — page 28; selected economic indicators Table 5, as of July 23, 1998.
  - Korea — page 30; selected economic indicators Table 6, as of July 23, 1998.
- Korea was a major Stand-By Arrangement user and also utilized the Supplemental Reserve Facility.

### ESAF, HIPC, and support for low-income countries
- Since mid-1980s, concessional financing provided through ESAF and predecessor SAF.
- As of April 30, 1998:
  - SDR 6.4 billion ($8.6 billion) had been disbursed under 71 ESAF Arrangements to 48 countries.
  - SDR 1.8 billion ($2.4 billion) had been disbursed under SAF arrangements.
- To finance continuation of the ESAF and IMF’s contribution to the HIPC Initiative, the Executive Board mobilized financing from bilateral contributions and IMF resources.
- HIPC Initiative progress:
  - April 1998: Uganda became the first country to reach its completion point under the HIPC Initiative.
  - Uganda will receive the equivalent of about $350 million in net present value terms, estimated to reduce nominal debt service by nearly $650 million; the IMF’s assistance will reduce the present value of its claims on Uganda by about $70 million.
  - Five additional countries (Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, Mozambique) became eligible for assistance that would reduce their nominal debt service by about $5 billion.
- Two in-depth evaluations of the ESAF were undertaken in 1997/98 (an internal review and an external evaluation by outside experts), confirming the ESAF’s value and identifying areas for improvement.

### Operational and organizational notes
- IMF technical assistance and training remained in strong demand in 1997/98: assistance averaged about 300 person-years and accounted for about 17 percent of total IMF administrative expenses.
- December 1997: IMF opened a Regional Office for Asia and the Pacific in Tokyo.
- December 1997: Republic of Palau became IMF’s 182nd member.

*Source: Chapter XIII. The audited financial statements for the year ended April 30, 1998 of the General (excerpt) and Chapter 5, "The Asian Crisis," Annual Report 1998 (PDF).*

### Chapter XIII. The audited financial statements for the year ended April 30, 1998 of the General

### Chapter XIII. The audited financial statements for the year ended April 30, 1998 of the General

### Audited financial statements and transmittal
- The audited financial statements for the year ended April 30, 1998 of the General Department, the SDR Department, accounts administered by the IMF, and the Staff Retirement Plan and the Supplemental Retirement Benefit Plan are presented in Appendix IX.
- Letter of transmittal signed by Michel Camdessus, Managing Director and Chairman of the Executive Board.

### Senior management and executive leadership
- Managing Director and Chairman of the Executive Board: Michel Camdessus
- First Deputy Managing Director: Stanley Fischer
- Deputy Managing Directors: Alassane D. Ouattara, Shigemitsu Sugisaki
- Note on personnel changes:
  - Effective August 1,1998, Stephen Pickford replaced Gus O’Donnell.
  - Effective July 1,1998, ZHANG Fengming replaced HAN Mingzhi.

### Executive Board and senior officers (selected entries as presented)
- Executive Directors and Senior Officers listed, including (examples as in the source):
  - Michael Mussa — Economic Counsellor
  - K. Burke Dillon — Director, Administration Department
  - Evangelos A. Calamitsis — Director, African Department
  - Hubert Neiss — Director, Asia and Pacific Department
  - Michael C. Deppler — Director, European I Department
  - John Odling-Smee — Director, European II Department
  - Shailendra J. Anjaria — Director, External Relations Department
  - Vito Tanzi — Director, Fiscal Affairs Department
  - Mohsin S. Khan — Director, IMF Institute
  - François P. Gianviti — General Counsel, Legal Department
  - Paul Chabrier — Director, Middle Eastern Department
  - Manuel Guitián — Director, Monetary and Exchange Affairs Department
  - Jack Boorman — Director, Policy Development and Review Department
  - Michael Mussa — Director, Research Department
  - Reinhard Munzberg — Secretary, Secretary’s Department
  - Carol S. Carson — Director, Statistics Department
  - David Williams — Treasurer, Treasurer’s Department
  - Claudio M. Loser — Director, Western Hemisphere Department
  - Massimo Russo — Special Advisor to the Managing Director
  - Warren N. Minami — Director, Bureau of Computing Services
  - Patrice Guilmard — Acting Director, Bureau of Language Services
  - Lindsay A. Wolfe — Director, Office of Budget and Planning
  - Eduard Brau — Director, Office of Internal Audit and Inspection
  - Kunio Saito — Director, Regional Office for Asia and the Pacific
  - Christian Brachet — Director, Office in Europe (Paris)
  - Alan A. Tait — Director and Special Trade Representative, Office in Geneva
  - J.B. Zulu — Director and Special Representative to the UN, Office at the United Nations
  - David M. Cheney — Chief, Editorial Division

### Governance structures and functions
- Board of Governors
  - Composed of one governor and one alternate governor for each member country.
  - The governor is appointed by the member country and is usually the minister of finance or the governor of the central bank.
  - All powers of the IMF are vested in the Board of Governors.
  - The Board of Governors may delegate to the Executive Board all except certain reserved powers.
  - The Board of Governors normally meets once a year.

- Executive Board
  - Responsible for conducting the day-to-day business of the IMF.
  - Composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman.
  - The Board usually meets several times each week.
  - The Executive Board carries out its work largely on the basis of papers prepared by IMF management and staff.
  - In 1997/98, the Board spent more than half of its time on member country matters (Article IV consultations and reviews and approvals of arrangements) and most of its remaining time on policy issues (such as the world economic outlook exercise, developments in international capital markets, the IMF’s financial resources, surveillance, data issues, the debt situation, and issues related to IMF facilities and program design).

- Interim Committee of the Board of Governors on the International Monetary System
  - An advisory body made up of 24 IMF governors, ministers, or other officials of comparable rank, representing the same constituencies as in the IMF’s Executive Board.
  - Normally meets twice a year, in April or May, and at the time of the Annual Meeting of the Board of Governors in September or October.
  - Responsibilities include advising and reporting to the Board of Governors on issues regarding the management and adaptation of the international monetary system, including sudden disturbances that might threaten the international monetary system, and on proposals to amend the Articles of Agreement.

- Development Committee (the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries)
  - Composed of 24 members—finance ministers or other officials of comparable rank—and generally meets at the same time as the Interim Committee.
  - Advises and reports to the Boards of Governors of the World Bank and the IMF on all aspects of the transfer of real resources to developing countries.

*Source: Chapter XIII. The audited financial statements for the year ended April 30, 1998 of the General (excerpt).*

### 5.  The Asian Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23

### 5.  The Asian Crisis

### Origin and evolution
- Crisis broke out in July 1997 in Thailand and subsequently spread to other Asian economies; global consequences continued after the end of the financial year.
- Led to unprecedented demands on IMF time (Executive Board, management, staff) and to a record level of IMF lending in 1997/98.
- Prompted creation of the Supplemental Reserve Facility (established December 1997).

### Impact on IMF lending, resources, and liquidity (1997/98)
- Member countries drew SDR 19.0 billion ($25.6 billion) from the IMF’s General Resources Account in the credit tranches during the year.
- IMF approved nine new Stand-By Arrangements, with total commitments of SDR 27.3 billion.
- IMF approved four new Extended Arrangements, with total commitments of SDR 2.8 billion.
- Eight new ESAF Arrangements approved with commitments totaling SDR 1.7 billion.
- As of April 30, 1998:
  - 14 Stand-By Arrangements were in effect.
  - 13 Extended Arrangements were in effect.
  - 33 ESAF Arrangements were in effect.
  - Total IMF credit outstanding rose to a record SDR 56 billion ($75.4 billion).
- Comparative prior-year figures:
  - As of April 30, 1997, total IMF credit outstanding was SDR 40.5 billion ($55.3 billion).
  - As of April 30, 1997, SDR 1 = $1.36553.
- Net uncommitted usable resources declined to SDR 22.6 billion at end-April 1998 from SDR 43.5 billion a year earlier.
- IMF liquidity indicators as of April 30, 1998:
  - Liquidity ratio fell to 44.8 percent from 120.5 percent a year earlier.
- Quotas:
  - In January 1998, Board of Governors adopted recommendation to increase total IMF quotas by 45 percent (to SDR 212 billion from SDR 146 billion) under the Eleventh General Review of Quotas. The increase will take effect after members having not less than 85 percent of total quotas as of December 28, 1997, have consented.

### Appropriate policy response and institutional reforms
- Creation of the Supplemental Reserve Facility to provide additional assistance to members facing exceptional balance of payments difficulties attributable to a large short-term financing need resulting from a sudden and disruptive loss of market confidence (established December 1997).
- Executive Board work led to intensified efforts to strengthen IMF surveillance, financial resources, and the architecture of the international monetary system.
- Executive Board identified imperatives for strengthening the international monetary system:
  - improving international and domestic financial systems;
  - strengthening IMF surveillance further;
  - promoting wider availability and greater transparency of information regarding economic data and policies;
  - reinforcing the central role of the IMF in crisis management; and
  - introducing more effective procedures for involving the private sector in forestalling or resolving financial crises.

### Surveillance: lessons, guidance, and transparency
- Five lessons from preliminary March 1998 review of implications for IMF surveillance:
  - effective surveillance depends critically on the timely availability of accurate information;
  - the focus of surveillance must extend beyond short-term macroeconomic issues while remaining appropriately selective;
  - surveillance at the country level should pay more explicit attention to policy interdependence and contagion risks;
  - the crucial role of credibility in restoring market confidence underscores the importance of transparency; and
  - effective surveillance depends fundamentally on the willingness of members to take the IMF’s advice.
- July 1997: Executive Board adopted guidelines clarifying the IMF’s role in governance issues:
  - calls for more comprehensive treatment of governance issues within IMF purview in Article IV consultations and IMF-supported programs;
  - evenhanded treatment of members;
  - enhanced collaboration with other institutions, notably the World Bank.
  - IMF contribution areas identified: improving management of public resources; supporting a transparent and stable regulatory environment conducive to efficient private sector activities.
- Interim Committee (April 1998) adopted the Code of Good Practices on Fiscal Transparency: Declaration on Principles to enhance accountability and credibility of fiscal policies.
- December 1997 Executive Board review found scope for improvement in members’ provision of data for surveillance and recommended complementing core indicators with data on:
  - reserve-related liabilities;
  - central bank derivative transactions;
  - private sector external debt; and
  - prudential banking system indicators.
- Data dissemination framework endorsed by Executive Board:
  - Special Data Dissemination Standard (established March 1996) for countries that have or might seek access to international financial markets;
  - General Data Dissemination System (approved December 1997) for all member countries.
- Transparency initiative: Press/Public Information Notices (PINs) introduced May 1997 to summarize Executive Board assessments following Article IV consultations. Of 136 Article IV consultations in 1997/98, 77 resulted in PINs.

### Role of the international community and capital account liberalization
- Annual Meetings (Hong Kong SAR, September 1997): Interim Committee issued Statement on the Liberalization of Capital Movements Under an Amendment of the IMF’s Articles of Agreement; invited Executive Board to complete work on proposed amendment to make liberalization of capital movements one of the IMF’s purposes and to extend IMF jurisdiction as needed.
- Executive Board sponsored a high-level seminar (March 1998) to solicit outside views.
- Interim Committee (April 1998) noted provisional agreement on the amendment concerning the IMF’s purposes and asked the Board to continue work on policy issues aiming to submit an appropriate amendment as soon as possible.

### Early lessons and policy emphases
- Surveillance must: obtain timely accurate information; incorporate governance, transparency, and financial-sector vulnerabilities; address policy interdependence/contagion; and emphasize credibility.
- Strengthened IMF–World Bank collaboration is critical to coordinate macroeconomic analysis and sectoral financial recommendations and to promptly identify emerging financial sector problems.

### Country programs and program evolution (Thailand, Indonesia, Korea)
- The chapter includes detailed treatments of Thailand, Indonesia, and Korea: evolution of IMF-supported programs (sections and tables referenced in contents: Thailand — page 27; Indonesia — page 28; Korea — page 30; selected economic indicators tables: Thailand — Table 4, as of July 23, 1998; Indonesia — Table 5, as of July 23, 1998; Korea — Table 6, as of July 23, 1998).
- Korea was a major Stand-By Arrangement user and also utilized the Supplemental Reserve Facility.

### ESAF, HIPC, and support for low-income countries
- Since mid-1980s, concessional financing provided through ESAF and predecessor SAF.
- As of April 30, 1998:
  - SDR 6.4 billion ($8.6 billion) had been disbursed under 71 ESAF Arrangements to 48 countries.
  - SDR 1.8 billion ($2.4 billion) had been disbursed under SAF arrangements.
- To finance continuation of the ESAF and IMF’s contribution to the HIPC Initiative, the Executive Board mobilized financing from bilateral contributions and IMF resources.
- HIPC Initiative progress:
  - April 1998: Uganda became the first country to reach its completion point under the HIPC Initiative.
  - Uganda will receive the equivalent of about $350 million in net present value terms, estimated to reduce nominal debt service by nearly $650 million; the IMF’s assistance will reduce the present value of its claims on Uganda by about $70 million.
  - Five additional countries (Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, Mozambique) became eligible for assistance that would reduce their nominal debt service by about $5 billion.
- Two in-depth evaluations of the ESAF were undertaken in 1997/98 (an internal review and an external evaluation by outside experts), confirming the ESAF’s value and identifying areas for improvement.

### Operational and organizational notes
- IMF technical assistance and training remained in strong demand in 1997/98: assistance averaged about 300 person-years and accounted for about 17 percent of total IMF administrative expenses.
- December 1997: IMF opened a Regional Office for Asia and the Pacific in Tokyo.
- December 1997: Republic of Palau became IMF’s 182nd member.

_Italic: Source — Chapter 5, "The Asian Crisis," Annual Report 1998 (PDF)._

---


_Source: https://www.imf.org/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/ar/98/pdf/_file01pdf.pdf_