## APPENDIX III (Principal policy decisions of the Executive Board) and related Appendices (selected substantive outcomes) ## Source details **Canonical URL:** [APPENDIX III (Principal policy decisions of the Executive Board) and related Appendices (selected substantive outcomes)](https://www.imf.org/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/ar/98/pdf/_file09pdf.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/ar/98/pdf/_file09pdf.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/ar/98/pdf/_file09pdf.pdf.json) --- ### A. Access Policy — Guidelines on Access Limits — Review - Executive Board decisions: - Annual access limit of 100 percent of quota established by Decision No. 10819-(94/95), as amended, shall remain in effect through October 31, 1998. - Other provisions of Decision No. 10181-(92/132) and Decision No. 10819-(94/95) remain appropriate. - Timing: - Next annual review to be completed by October 31, 1998. - Decision reference: Decision No. 11608-(97/112) (November 13, 1997). ### B. IMF’s Income Position — Rates, Transfers, and Disposition of Net Income - Retroactive reduction of rate of charge: - Paragraph 2 of Decision No. 11482-(97/42) amended by replacing “109.6 percent” with “107 percent.” - Decision reference: Decision No. 11683-(98/27) (March 12, 1998). - ESAF Trust — Reserve Account — Transfer to the ESAF-HIPC Trust (FY1998 and FY1999): - For financial year 1998, no reimbursement to the General Resources Account for ESAF Trust administration costs; equivalent amount transferred after year-end from the ESAF Trust Reserve Account (through the Special Disbursement Account) to the ESAF-HIPC Trust. - For financial year 1999, no reimbursement to the General Resources Account for ESAF Trust administration costs; one-fourth of the estimated annual cost to be transferred after the end of each financial quarter ended July 31 and October 31, 1998 and January 31 and April 30, 1999 from the ESAF Trust Reserve Account (through the Special Disbursement Account) to the ESAF-HIPC Trust. - Decision reference: Decision No. 11683-(98/27) (March 12, 1998); Decision No. 11713-(98/49) ESAF (April 28, 1998). - Supplemental Reserve Facility — disposition of net operational income: - For financial year 1998, after administering the ESAF Trust, any remaining net operational income generated by the Supplemental Reserve Facility to be transferred after the end of the financial year to the General Reserve. - For financial year 1999, similar disposition: after meeting the cost of administering the ESAF Trust, any remaining net operational income generated by the Supplemental Reserve Facility to be transferred after the end of the financial year to the General Reserve. - Decision references: Decision No. 11683-(98/27) (March 12, 1998); Decision No. 11716-(98/49) (April 28, 1998). - Disposition of net income for FY 1998: - SDR 98,483,336 of the Fund’s net income for financial year 1998 shall be placed in the Fund’s Special Reserve after the end of the financial year. - Decision reference: Decision No. 11710-(98/49) (April 28, 1998). - Rate of charge on use of Fund resources for FY 1999: - Effective May 1, 1998, proportion of the rate of charge referred to in Rule I-6(4) to the SDR interest rate under Rule T-1 shall be 107 percent. - Any net income for financial year 1999 in excess of an amount equivalent to 5 percent of the Fund’s reserves at the beginning of that financial year shall be used to reduce retroactively the proportion of the rate of charge to the SDR interest rate for financial year 1999. - If net income for financial year 1999 is below an amount equivalent to 5 percent of the Fund’s reserves at the beginning of that financial year, the amount of projected net income for financial year 2000 shall be increased by the equivalent of that shortfall. - For purposes of this provision, net income shall be calculated without taking into account net operational income generated by the Supplemental Reserve Facility. - Decision reference: Decision No. 11711-(98/49) (April 28, 1998). ### C. Enhanced Structural Adjustment Facility (ESAF) — Use, Financing, and Reviews - Use of resources for commercial debt- and debt-service-reduction operations — amendment: - Resources committed to help finance cost of a debt- and debt-service-reduction operation with commercial banks shall be disbursed only when: - (i) the operation materializes; - (ii) the program supported by the arrangement remains on track; and - (iii) the Executive Board is satisfied the use would be efficient and market based. - Resources may be made available from the outset of an arrangement if conditions are met. - Decision reference: Decision No. 11533-(97/67) ESAF (July 2, 1997). - ESAF-HIPC Initiative — financing steps and amounts: - Transfer SDR 70 million from the ESAF Trust Reserve Account to the Special Disbursement Account for special ESAF operations. - Section V, subparagraph 5(b) amended by substituting “SDR 250 million” for “SDR 180 million.” - Executive Board to return to financing issues by mid-summer 1998. - Decision reference: Decision No. 11610-(97/113) (November 24, 1997). - ESAF Trust — adequacy review: - Determined Reserve Account amounts sufficient to meet all obligations that could give rise to payment from the Reserve Account to lenders to the Loan Account in the six months from January 1 to June 30, 1998. - Decision reference: Decision No. 11648-(98/1) ESAF (December 30, 1997). ### D. Supplemental Reserve Facility (SRF) — Establishment, Conditions, and Operational Rules - Objective: - Provide financial assistance to a member experiencing exceptional balance of payments difficulties due to a large short-term financing need resulting from a sudden and disruptive loss of market confidence, when strong adjustment policies and adequate financing are reasonably expected to produce an early correction. - Likely use cases: - Situations where outflows may create a risk of contagion posing a potential threat to the international monetary system. - Conditions and principles: - Fund will consider financing from other creditors; members using SRF resources encouraged to maintain creditor participation to minimize moral hazard and ensure burden sharing. - Use of Fund resources may be made conditional upon adoption of measures under Article VI, Section 1 of the Fund’s Articles of Agreement. - Interaction with other facilities: - SRF resources available in addition to credit tranches or extended Fund facility when (i) member faces described difficulties and (ii) projected access would otherwise exceed annual or cumulative limits; financing beyond limits provided only under this Decision. - Determination of financing to take into account: - member’s financing needs, capacity to repay (including program strength), outstanding use of Fund credit, record using Fund resources, cooperation with Fund surveillance, and the Fund’s liquidity. - Commitment, purchases, and repurchase terms: - Financing committed for up to one year regardless of arrangement length; generally available in two or more purchases. - First purchase available at approval; subsequent purchases subject to arrangement conditions. - Repurchases: - (a) Within two to two and a half years from date of each purchase, in two equal semi-annual installments: first due two years and second due two and a half years from date of each purchase. - (b) Member expected to repurchase one year before due; Fund may extend expectation by up to one year upon request. - (c) Fund shall not approve requests for general resources from a member failing to meet a repurchase expectation under (b). - Provision for suspension of further purchases where repurchase expectations are unmet. - Rates and surcharges: - During first year from approval, rate of charge on SRF holdings shall be 300 basis points per annum above rate of charge referred to in Rule I-6(4) as adjusted for burden sharing. - Surcharge increased by 50 basis points at the end of that period and every six months thereafter until surcharge reaches 500 basis points, subject to paragraph 9. - Operational/legal provisions: - Purchases under this Decision excluded from definition of “reserve tranche purchase” pursuant to Article XXX(c). - Overdue obligations: provisions of Decision No. 8165-(85/189) G/TR (December 30, 1985), except Section IV, apply; rate of charge on overdue repurchases determined by Fund but not less than maximum rate specified in paragraph 8. - Fund may grant waiver of the limitation of 200 percent of quota in Article V, Section 3(b)(iii) when necessary to permit purchases under this Decision. - Review: - Decision and its operation to be reviewed no later than December 31, 1998. - Decision reference: Decision No. 11627-(97/123) SRF (December 17, 1997). ### E. General Arrangements to Borrow — Renewal - Executive Board Decision No. 1289-(62/1) on the General Arrangements to Borrow, as amended, renewed for a period of five years from December 26, 1998. - Decision reference: Decision No. 11609-(97/112) (November 19, 1997). ### F. Increases in Quotas of Members — Eleventh General Review (principal outcomes and procedures) - Size and distribution: - Present total of Fund quotas increased by 45 percent. - Executive Board proposes increase from approximately SDR 146 billion to approximately SDR 212 billion. - Distribution of the overall increase: - 75 percent distributed in proportion to present quotas; - 15 percent distributed in proportion to members’ shares in calculated quotas (based on 1994 data); - 10 percent distributed among members whose present quotas are out of line with positions in world economy (measured by excess of share in calculated quotas over share in actual quotas), of which 1 percent of the overall increase distributed among five members whose current quotas are far out of line and can contribute to Fund liquidity over the medium term. - Quotas determined under paragraph 4 to be rounded to the nearest multiple of SDR 0.1 million. - Quotas for France, Germany, Italy, and the United Kingdom adjusted to maintain unchanged the increases for all other members; United Kingdom and France agreed to maintain equal distribution between themselves as first agreed under the Ninth General Review. - Board of Governors adopted Resolution No.53-2 effective January 30, 1998. - Timetable, consent, payment, participation: - A member may consent before 6:00 p.m., Washington time, January 29, 1999; Executive Board authorized to extend period. - A member’s quota increase effective only after Fund receives member’s consent and payment and Fund determines participation requirement satisfied. - Participation requirement: reached when members having not less than 85 percent of the total of quotas on December 23, 1997 have consented to increases as set out in Annex. - Payment terms: - Member must pay increase within 30 days after (a) date of consent, or (b) date participation requirement is met, whichever is later; Executive Board may extend payment period. - Members with overdue repurchases, charges, or assessments to the General Resources Account may not consent or pay until current. - Payment composition and reserve assets: - Article III, Section 3(a): 25 percent of any increase to be paid in SDRs or in currencies of other members specified by the Fund, subject to concurrence. - Paragraph 8 of the Resolution: 25 percent of increase to be paid in SDRs or in Fund-selected currencies (subject to concurrence), or in combination; balance paid in member’s own currency. - Reserve asset payment enlarges or creates a reserve tranche position of equivalent amount. - Fund stands ready to assist members lacking sufficient reserves by facilitating SDR borrowing from cooperating members; such loans repaid on same day from SDR proceeds of drawings of reserve tranche positions established by payment of SDRs. - Executive Board policy guidance (factors considered): - Need for adequate Fund resources given growth of world trade and payments since 1990, scale of potential payments imbalances, prospective demand for Fund resources, rapid globalization and liberalization since 1990, and Fund’s liquidity position and adequacy of borrowing arrangements (GAB and prospective NAB). - Emphasis that quotas remain principal form of financing; borrowing only in exceptional circumstances. - Members should approach Fund early in balance of payments difficulties and maintain market confidence through adequate, transparent policies and timely information. - Key numerical outcomes and selected proposed quotas (Annex highlights — proposed quotas in millions of SDRs): - Total quotas increased by 45 percent: from approximately SDR 146 billion to approximately SDR 212 billion. - Rounding rule: nearest multiple of SDR 0.1 million. - Selected proposed quotas: - United States: 37,149.3 - Japan: 13,312.8 - Germany: 13,008.2 - France: 10,738.5 - United Kingdom: 10,738.5 - Saudi Arabia: 6,985.5 - Russia: 5,945.4 - Netherlands: 5,162.4 - Belgium: 4,605.2 - China: 4,687.2 - India: 4,158.2 - Brazil: 3,036.1 - Spain: 3,048.9 - Switzerland: 3,458.5 - Canada: 6,369.2 - Annex lists proposed quotas for all members expressed in millions of SDRs. *Source: APPENDIX III — Annual Report 1998 (Principal policy decisions of the Executive Board).* --- ### Schedule M and Proposed Fourth Amendment (SDR one-time allocation and Article amendments) ### Proposed Fourth Amendment — principal textual changes - Amendment to Article XV, Section 1: - (a) Authorizes Fund to allocate special drawing rights in accordance with Article XVIII to members that are participants in the Special Drawing Rights Department. - (b) Adds that the Fund shall allocate special drawing rights to participants in accordance with Schedule M. - A new Schedule M titled "Special One-Time Allocation of Special Drawing Rights" to be added. ### Schedule M — Special One-Time Allocation: principal provisions and mechanics - General rule (paragraph 1): - Each participant in the SDR Department as of September19, 1997 shall, on the 30th day following the effective date of the fourth amendment, receive an allocation of SDRs resulting in net cumulative allocation equal to 29.315788813 percent of its quota as of September19, 1997, provided calculations for participants whose quotas have not been adjusted as proposed in Resolution No. 45-2 are based on quotas proposed in that resolution. - New participants (paragraph 2): - Countries becoming participants after September 19, 1997 but within three months of membership receive allocation on the 30th day following later of (i) date they become participant or (ii) effective date of fourth amendment. - Allocation results in net cumulative allocation equal to 29.315788813 percent of quota as of date they become participant, adjusted by specific ratio multipliers described in paragraphs 2(b)(i) and 2(b)(ii). - Relevant participants for adjustments are those described in paragraph 2(c). - Federal Republic of Yugoslavia (Serbia/Montenegro) succession (paragraph 3): - If succession recognized under Decision No. 10237-(92/150), allocation on the 30th day following later of succession date or effective date of fourth amendment; allocation equal to 29.315788813 percent of quota proposed under the referenced decision, adjusted per paragraph 2(b)(ii) and (c). - Opt-out (paragraph 4): - Fund shall not allocate SDRs under Schedule M to participants that notified in writing prior to allocation that they do not wish to receive the allocation. - Escrow and overdue obligations (paragraph 5): - If participant has overdue obligations at time of allocation, allocated SDRs deposited and held in an escrow account within SDR Department and released upon discharge of all overdue obligations. - SDRs in escrow not available for any use and not included in calculations of allocations or holdings except for calculations under Schedule M; if held in escrow when participant terminates participation or when SDR Department liquidated, SDRs shall be canceled. - Overdue obligations defined to include overdue repurchases and charges in General Resources Account; overdue principal and interest on loans in Special Disbursement Account; overdue charges and assessments in SDR Department; and overdue trustee liabilities. - Principle of separation between General Department and SDR Department and unconditional character of SDRs as reserve assets maintained except as provided. - Entry into force and adoption: - Board of Governors adopted Resolution effective September 23, 1997. - Exact allocation target preserved verbatim: - 29.315788813 percent (applied to quotas as specified). - Entry into force condition for amendment: - Certification that three-fifths of members, having eighty-five percent of total voting power, have accepted modifications. *Source: APPENDIX III — Proposed Fourth Amendment and Schedule M (Annual Report 1998).* --- ### Relations with other international organizations — collaboration and division of roles (selected) - IMF–World Bank: - Agreement on strengthening collaboration mechanisms for financial sector issues (April 1997 Joint Statement); Bank focuses on sectoral/developmental aspects in developing countries; IMF focuses on macroeconomic aspects in all members. - Closer collaboration on social impacts of policy advice and HIPC Initiative implementation; staff initiate creditor consultations prior to “decision point,” and Managing Director and President send joint letters to creditors following decision and completion points. - IMF–United Nations: - Collaboration at institution-wide and country levels; IMF Office at the UN (New York) supports increased IMF participation in UN committees and statistical collaboration and postconflict situations. - IMF Office in Geneva works with UNCTAD on trade issues. - April 1998: IMF Managing Director attended UN ECOSOC Special High-Level Meeting on “Global Financial Integration and Development and Recent Issues.” - IMF–WTO: - Cooperation Agreement effective December 1996; institutional/staff consultations, staff attendance at each other’s meetings, exchange of documents. - Working group of IMF, WTO, and World Bank studies greater coherence in global economic policymaking; Director-General of WTO noted working relationships fruitful (November 1997). - IMF committed in principle to provide technical assistance to 27 countries by end of financial year under Integrated Initiative for Least-Developed Countries’ Trade Development. - IMF–ILO and regional development banks: - Strengthened collaboration with ILO on macroeconomic stability and employment; increased contacts and staff participation in ILO meetings in 1997/98. - Intensified cooperation with regional development banks in 1997/98, particularly concerning HIPC Initiative; multilateral creditors allowed to attend country-specific Board discussions on HIPC Initiative matters (July 21, 1997). - Role of IMF management and external communications: - Managing Director engaged with UN, BIS, OECD, and other organizations; addressed UN Second Committee on Asian crisis in October 1997. - May 1998: Managing Director inaugurated IMF-Singapore Regional Training Institute. - IMF expanded media contacts, publications, data dissemination, website use, and engagement with academic, corporate, and civil society audiences. *Source: APPENDIX III — Annual Report 1998.* --- ### APPENDIX V — External Communications, Publications, and Outreach (selected substantive points) ### External communications and outreach — instruments and metrics - Instruments: speeches, seminars, conferences, management and staff contacts with media, academics, corporate sector, civil society. - Resident representatives and overseas staff enhanced role in explaining IMF work; heads of missions increasingly give press briefings at conclusion of staff visits. - Website (launched 1996) usage by end-1997/98: - Total visits from outside the IMF averaged about one million a month, nearly five times the level a year earlier. - In May 1998, 32 percent of visitors identified as U.S.-based and 41 percent as outside the United States. - Executive Board called for review and assessment of IMF communications strategy and performance to be completed in 1998/99. ### Publications, pricing, and availability (selected) - Balance of Payments Statistics Yearbook, Vol. 48, 1997: $68.00 a year. - Direction of Trade Statistics: Quarterly, with yearbook: $110.00 a year; $55.00 to full-time university faculty members and students; $32.00 for yearbook only. - Government Finance Statistics Yearbook, Vol. 21, 1997: $60.00. - International Financial Statistics: Monthly, with yearbook: $246.00 a year; $123.00 to full-time university faculty members and students; $65.00 for yearbook only. - Staff Papers: Four times a year: $56.00 a year; $28.00 to full-time university faculty members and students. - Finance and Development: Quarterly — Free; Airspeed delivery: $20.00. - IMF Survey: Twice monthly (once in December): $79.00 a year for private firms and individuals. - Occasional Papers Nos. 151–53: $15.00 each; $12.00 each to full-time university faculty members and students. - Occasional Papers Nos. 154–61: $18.00 each; $15.00 each to full-time university faculty members and students. - World Economic Outlook: Twice a year — $36.00 ($25.00 to full-time university faculty and students). - Working Papers 97/46–97/182 and 98/1–98/62 issued in 1997/98: $7.00 each; $210.00 for annual subscription. - Staff Country Reports 97/25–97/121 and 98/1–98/30 issued in 1997/98: $15.00 each. - Distribution contact details provided for Publication Services (address, telephone, telefax, e-mail) and IMF website. *Source: APPENDIX V — External Relations, Annual Report 1998.* --- ### APPENDIX VI — Interim Committee and Press Communiqués: Crisis response, surveillance, and policy guidance ### Interim Committee assessment and guidance (selected highlights) - Global outlook (Hong Kong, September 21, 1997): - Welcomed generally favorable prospects for continued expansion of world output and trade, but noted country-level risks. - EMU: noted convergence and commitment to start EMU on schedule as basis for transition to euro on January 1, 1999. - Emphasized globalization’s benefits and need for adherence to “Declaration on Partnership for Sustainable Global Growth.” - Response to Asian turmoil: - Committee commended Fund for "prompt and effective response to the events in Asia" and invited Executive Board to examine lessons and report findings. - Noted recent disturbances highlighted importance of internal consistency of macroeconomic policies, strengthening financial systems, and avoiding excessive external deficits and reliance on short-term financing. - SDR one-time allocation: - Welcomed Executive Board agreement on special one-time SDR allocation amounting to SDR 21.4 billion, which will double amount of SDRs already allocated; recommended adoption by Board of Governors. - HIPC, ESAF, and financing: - Welcomed progress including assistance decisions and preliminary discussions for several countries. - Noted continuing efforts to secure resources to complete financing of ESAF and HIPC initiatives; urged rapid completion of financing. - Strengthening international monetary architecture: - Pillars include strengthened financial systems, greater availability and transparency of information, central role of Fund in crisis management, and appropriate private sector involvement. - Surveillance and transparency: - Fund to intensify surveillance of financial sector issues and capital flows; examine ways to strengthen monitoring of capital flows. - Progress welcomed on Special and General Data Dissemination Initiatives; request to broaden SDDS to cover additional financial data including net reserves, debt (particularly short-term), and indicators of financial sector stability. - Encourage more members to subscribe to SDDS and be in full observance by end of transition period in December 1998. - Private sector involvement: - Private creditors to bear more consequences of actions; involve private creditors early in crisis situations to achieve equitable burden sharing and limit moral hazard. - Executive Board requested to intensify work on strengthening private sector involvement and report to next Committee meeting. ### Code of Good Practices on Fiscal Transparency - Objectives: - Increase fiscal transparency, enhance accountability and credibility of fiscal policy. - Key elements and practices (selected): - I. Clarity of Roles and Responsibilities: distinguish government sector, clear allocation of responsibilities, legal basis for fiscal management. - II. Public Availability of Information: full information on past, current, projected fiscal activity; publication of contingent liabilities and central government debt and financial assets. - III. Open Budget Preparation, Execution, and Reporting: specify fiscal objectives, macroeconomic framework, budget classification and presentation, identification of major risks, timely audited final accounts. - IV. Independent Assurances of Integrity: national audit body reports, independent scrutiny of macroeconomic forecasts, institutional independence for national statistics office. - IMF to provide technical assistance and monitor progress in implementation. ### ESAF and HIPC Initiatives — Implementation and financing - Noted assistance decisions and pipeline: Uganda reached completion point; decisions in principle to provide assistance to Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, and Mozambique; preliminary discussions on Guinea-Bissau and Mali. - Estimated debt relief for six countries: about $5.7 billion (the equivalent of $3 billion in NPV terms). - Urged rapid completion of funding for ESAF and HIPC; Executive Board to report back to Interim Committee. ### Meetings and next steps - Interim Committee meetings scheduled and reported (e.g., Fiftieth Meeting, Washington, D.C., April 16, 1998; next meeting October 4, 1998). - Executive Board requested to report on surveillance, private sector involvement work, and financing of ESAF/HIPC at next meetings. *Source: APPENDIX VI — Annual Report 1998 (Press Communiqués and Interim Committee materials).* --- *Source: APPENDIX III, APPENDIX V, and APPENDIX VI, ANNUAL REPORT 1998 (content units from _file09pdf).* ### APPENDIX III ### APPENDIX III ### A. Access Policy—Guidelines on Access Limits—Review - Decision No. 10181-(92/132) (November 3, 1992) and Decision No. 10819-(94/95) (October 24, 1994), as amended by Decision No. 11593-(97/106) (October 23, 1997), form the basis of the review. - Executive Board decisions: - (i) The annual access limit of 100 percent of quota established by Decision No. 10819-(94/95), as amended, shall remain in effect through October 31, 1998. - (ii) The other provisions of Decision No. 10181-(92/132) and Decision No. 10819-(94/95) remain appropriate in the present circumstances. - Timing: - The next of the annual reviews prescribed by Decision No. 10181-(92/132) and Decision No. 10819-(94/95), as amended, shall be completed by October 31, 1998. - Decision reference: Decision No. 11608-(97/112) (November 13, 1997). ### B. IMF’s Income Position - (a) Retroactive Reduction of Rate of Charge—Amendment of Decision No. 11482-(97/42) - Paragraph 2 of Decision No. 11482-(97/42) (adopted April 21, 1997) amended by replacing “109.6 percent” with “107 percent.” - Decision reference: Decision No. 11683-(98/27) (March 12, 1998). - (a) ESAF Trust—Reserve Account—Transfer to the ESAF-HIPC Trust - For financial year 1998, no reimbursement shall be made to the General Resources Account from the ESAF Trust Reserve Account for the cost of administering the ESAF Trust. - An amount equivalent to such cost shall be transferred after the end of the financial year from the ESAF Trust Reserve Account (through the Special Disbursement Account) to the ESAF-HIPC Trust. - Decision reference: Decision No. 11683-(98/27) (March 12, 1998). - (a) Supplemental Reserve Facility—Disposition of Net Operational Income - For financial year 1998, after meeting the cost of administering the ESAF Trust, any remaining net operational income generated by the Supplemental Reserve Facility shall be transferred, after the end of the financial year, to the General Reserve. - Decision reference: Decision No. 11683-(98/27) (March 12, 1998). - (b) Disposition of Net Income for FY 1998 - SDR 98,483,336 of the Fund’s net income for financial year 1998 shall be placed in the Fund’s Special Reserve after the end of the financial year. - Decision reference: Decision No. 11710-(98/49) (April 28, 1998). - (c) Rate of Charge on the Use of Fund Resources for FY 1999 - 1. Effective May 1, 1998, the proportion of the rate of charge referred to in Rule I-6(4) to the SDR interest rate under Rule T-1 shall be 107 percent. - 2. Any net income for financial year 1999 in excess of an amount equivalent to 5 percent of the Fund’s reserves at the beginning of that financial year shall be used to reduce retroactively the proportion of the rate of charge to the SDR interest rate for financial year 1999. - If net income for financial year 1999 is below an amount equivalent to 5 percent of the Fund’s reserves at the beginning of that financial year, the amount of projected net income for financial year 2000 shall be increased by the equivalent of that shortfall. - For the purpose of this provision, net income shall be calculated without taking into account net operational income generated by the Supplemental Reserve Facility. - Decision reference: Decision No. 11711-(98/49) (April 28, 1998). ### C. Enhanced Structural Adjustment Facility (ESAF) - (a) Use of Resources for Commercial Debt- and Debt-Service-Reduction Operations—ESAF Trust Instrument—Amendment - The Instrument to Establish the Enhanced Structural Adjustment Facility Trust (Decision No. 8759-(87/176) ESAF, as amended) is further amended by adding a subparagraph to Section II, paragraph 3(b) specifying conditional disbursement of resources committed to help finance the cost of a debt- and debt-service-reduction operation with commercial banks: - Resources committed for such purposes shall be disbursed only when (i) the operation materializes, (ii) the program supported by the arrangement remains on track, and (iii) the Executive Board is satisfied the use would be efficient and market based. - Resources may be made available from the outset of an arrangement if the above conditions are met. - Decision reference: Decision No. 11533-(97/67) ESAF (July 2, 1997). - (b) ESAF-HIPC Initiative—Status Report and Options for Financing - Executive Board agreed to: - Transfer SDR 70 million from the ESAF Trust Reserve Account to the Special Disbursement Account and use for special ESAF operations. - Return to consider the financing issues by mid-summer 1998. - Amendment to Instrument to Establish the ESAF Trust: - Section V, subparagraph 5(b) amended by substituting “SDR 250 million” for “SDR 180 million.” - Decision reference: Decision No. 11610-(97/113) (November 24, 1997). - (c) ESAF Trust—Reserve Account—Review - Pursuant to Executive Board Decision No. 10286-(93/23) ESAF, the Fund reviewed the adequacy of the Reserve Account of the ESAF Trust and determined amounts held are sufficient to meet all obligations which could give rise to a payment from the Reserve Account to lenders to the Loan Account of the ESAF Trust in the six months from January 1 to June 30, 1998. - Decision reference: Decision No. 11648-(98/1) ESAF (December 30, 1997). - (d) ESAF Trust—Transfer to the ESAF-HIPC Trust - See Section B(a) above for full text. - Decision reference: Decision 11683-(98/27) (March 12, 1998). - (e) ESAF Trust—Reserve Account—Transfer to the ESAF-HIPC Trust (FY1999) - For financial year 1999, no reimbursement shall be made to the General Resources Account from the ESAF Trust Reserve Account for the cost of administering the ESAF Trust. - One-fourth of the estimated annual cost shall be transferred after the end of each financial quarter ended July 31 and October 31, 1998 and January 31 and April 30, 1999 from the ESAF Trust Reserve Account (through the Special Disbursement Account) to the ESAF-HIPC Trust. - Decision reference: Decision No. 11713-(98/49) ESAF (April 28, 1998). ### D. Supplemental Reserve Facility (SRF) - (a) Establishment—Purpose and Conditions - Objective: - Provide financial assistance to a member experiencing exceptional balance of payments difficulties due to a large short-term financing need resulting from a sudden and disruptive loss of market confidence, when strong adjustment policies and adequate financing are reasonably expected to produce an early correction. - Likely use cases: - Situations where outflows may create a risk of contagion posing a potential threat to the international monetary system. - Conditions and principles: - Fund will take into account financing provided by other creditors. - Members using resources under this Decision will be encouraged to seek to maintain participation of creditors, both official and private, to minimize moral hazard and ensure appropriate burden sharing. - Use of Fund resources may be made conditional upon adoption of measures under Article VI, Section 1 of the Fund’s Articles of Agreement. - Interaction with other Fund facilities: - Financing under this Decision is available in addition to resources in the credit tranches or under the extended Fund facility when: - (i) a member faces the type of balance of payments difficulties described above; and - (ii) projected access in the credit tranches or under the extended Fund facility would otherwise exceed either the annual or cumulative limit. - In such cases, financing beyond either limit will be provided only under this Decision. - Determination of financing: - Will take into account the member’s financing needs, capacity to repay (including program strength), outstanding use of Fund credit, record in using Fund resources, cooperation with Fund surveillance, and the Fund’s liquidity. - Commitment and purchases: - Financing committed for up to one year regardless of corresponding arrangement length; generally available in two or more purchases. - First purchase available at time of approval; subsequent purchases subject to corresponding arrangement’s conditions. - Corresponding arrangement will identify total amount and phasing of SRF financing. - Repurchase terms: - (a) Repurchases within two to two and a half years from date of each purchase, in two equal semi-annual installments: first due two years and second due two and a half years from date of each purchase. - (b) Member expected to repurchase one year before due; Fund may extend each repurchase expectation by up to one year upon request. - (c) Fund shall not approve requests for general resources from a member failing to meet a repurchase expectation under (b). - Provision for suspension of further purchases where repurchase expectations are unmet. - Operational and legal provisions: - Purchases under this Decision and holdings resulting from such purchases shall be excluded for the purposes of the definition of “reserve tranche purchase” pursuant to Article XXX(c). - During the first year from approval, rate of charge on holdings acquired as a result of purchases under this Decision shall be 300 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for burden sharing. - This surcharge increased by 50 basis points at the end of that period and every six months thereafter until surcharge reaches 500 basis points, subject to paragraph 9 provisions. - Income generated under this Decision shall not be taken into account when determining net income in excess of the net income target for purposes of paragraph 3 of Decision No. 11482-(97/42) (adopted April 21, 1997), pending a Decision on its use. - Overdue obligations: provisions of Decision No. 8165-(85/189) G/TR (December 30, 1985), except Section IV, apply, subject to the provision that the rate of charge on overdue repurchases shall be determined by the Fund but shall not be less than the maximum rate of charge specified in paragraph 8. - Fund’s holdings from SRF purchases considered separate from holdings arising from other Fund policies, except for determining level of conditionality in credit tranches. - Fund prepared to grant waiver of the limitation of 200 percent of quota in Article V, Section 3(b)(iii) when necessary to permit purchases under this Decision. - Review: - This Decision and its operation will be reviewed no later than December 31, 1998. - Decision reference: Decision No. 11627-(97/123) SRF (December 17, 1997). - (b) Disposition of Net Operational Income - For financial year 1999, after meeting the cost of administering the ESAF Trust, any remaining net operational income generated by the Supplemental Reserve Facility shall be transferred, after the end of that financial year, to the General Reserve. - Decision reference: Decision No. 11716-(98/49) (April 28, 1998). - See Section B(a) for related FY1998 disposition. ### E. General Arrangements to Borrow—Renewal - Executive Board Decision No. 1289-(62/1) on the General Arrangements to Borrow, as amended, is renewed for a period of five years from December 26, 1998. - Decision reference: Decision No. 11609-(97/112) (November 19, 1997). ### F. Increases in Quotas of Members - (a) Periods for Consent to and Payment for Increases in Quotas Under Ninth General Review—Extension (two Executive Board decisions) - Decision (June 17, 1997): - Notices in accordance with paragraph 2 of Board of Governors Resolution No. 45-2 must be received before 6:00 p.m., Washington time, on December 31, 1997. - Each member shall pay to the Fund the increase in its quota under the Ninth Review within 1,876 days after the later of (a) the date it notifies the Fund of its consent, or (b) November 11, 1992. - Decision reference: Decision No. 11517-(97/61) (June 17, 1997). - Decision (December 30, 1997): - Notices must be received before 6:00 p.m., Washington time, on June 30, 1998. - Each member shall pay the increase within 2,057 days after the later of (a) the date it notifies the Fund of its consent, or (b) November 11, 1992. - Decision reference: Decision No. 11649-(98/1) (December 30, 1997). - (b) Eleventh General Review of Quotas—Report to the Board of Governors and Proposed Resolution - Executive Board actions: - I. Approved the Report of the Executive Board to the Board of Governors entitled “Increases in Quotas of Fund Members—Eleventh General Review” for transmission. - II. Directed procedures for voting by the Board of Governors: - 1. Board of Governors requested to vote with-out meeting pursuant to Section 13 of the By-Laws upon the proposed Resolution entitled “Increases in Quotas of Fund Members—Eleventh General Review: Resolution of the Board of Governors.” - 2. Secretary directed to send the Report and proposed Resolution to each member by rapid means on or before December 23, 1997. - 3. To be valid, votes must be cast by Governors or Alternate Governors and must be received at the seat of the Fund on or before 6:00 p.m., Washington time on January 30, 1998. Votes received after that time will not be counted. - 4. Effective date of the Resolution shall be the last day for voting. - 5. All votes held in custody of the Secretary until counted; proceedings confidential until result determined by Executive Board. - 6. Secretary authorized to take further action deemed appropriate to carry out the decision. - Decision reference: Decision No. 11644-(97/127) (December 22, 1997). - Attachment—Report highlights: - Legal basis: Article III, Section 2(a) requires a general review at intervals of not more than five years and permits adjustments of quotas. - Timing: The five-year period for the Eleventh General Review ends on March 31, 1998 (five years from the date the Tenth General Review should have been concluded). - Background: The Tenth General Review completed in early 1995 did not recommend increases in quotas. The Executive Board reported then that the Fund was relatively well-positioned to meet prospective substantial demand over the next three years but expected liquidity to decline and that adequacy of quotas would be closely monitored. - Interim Committee guidance (1995–1997): - April 1995: Requested Executive Board to continue reviewing adequacy of resources and to carry forward work on the Eleventh General Review of Quotas. - October 1995: Welcomed progress and requested Board to move forward. - April 1996: Noted progress and stressed need to ensure adequacy of quotas given changes since 1990; requested continued work. - September 1996: Reiterated request to continue work and reach conclusion as soon as possible. - April 1997: Requested completion in time for the Hong Kong meeting; noted proposed distribution should be predominantly equiproportional while contributing to correction of the most important quota imbalances. - Attachment reference: Report of the Executive Board to the Board of Governors: Increase in Quotas of Fund Members—Eleventh General Review (attached to Decision No. 11644-(97/127)). *Source: APPENDIX III, ANNUAL REPORT 1998 (Principal policy decisions of the Executive Board).* ### APPENDIX III ### APPENDIX III ### Summary of major decisions on the Eleventh General Review of Quotas - The present total of Fund quotas would be increased by 45 percent. - The Executive Board proposes that the present total of Fund quotas be increased by 45 percent, from approximately SDR 146 billion to approximately SDR 212 billion. - Distribution of the overall increase: - 75 percent of the overall increase would be distributed in proportion to present quotas; - 15 percent of the overall increase would be distributed in proportion to members’ shares in calculated quotas (based on 1994 data); - 10 percent of the overall increase would be distributed among those members whose present quotas are out of line with their positions in the world economy (measured by the excess of their share in calculated quotas over their share in actual quotas), of which 1 percent of the overall increase would be distributed among five members whose current quotas are far out of line with their relative economic positions and which are in a position to contribute to the Fund’s liquidity over the medium term. - Quotas determined under paragraph 4 to be rounded to the nearest multiple of SDR 0.1 million. - Quotas for France, Germany, Italy, and the United Kingdom are to be adjusted in a manner that maintains unchanged the increases for all other members as determined under paragraph 4; the United Kingdom and France agreed to maintain equal distribution of quotas between themselves as first agreed under the Ninth General Review. - The Board of Governors adopted the Resolution effective January 30, 1998, designated Resolution No.53-2. ### Timetable, consent, payment, and participation requirements - A member may consent to the increase in its quota at any time before 6:00 p.m., Washington time, January 29, 1999; the Executive Board is authorized to extend the period of consent. - A member’s quota increase will take effect only after the Fund has received the member’s consent and the member has paid the increase in subscription, and only after the Fund determines that the participation requirement has been satisfied. - Participation requirement: reached when the Fund determines that members having not less than 85 percent of the total of quotas on December 23, 1997 have consented to the increases in their respective quotas as set out in the Annex. - Payment terms: - A member must pay the increase in its subscription within 30 days after (a) the date on which the member notifies the Fund of its consent, or (b) the date on which the participation requirement is met, whichever is later; - The Executive Board may extend the period for payment. - Members with overdue repurchases, charges, or assessments to the General Resources Account may not consent to or pay for the increase until they become current in these obligations. - Periods for consent and payment for quota increases under the Ninth Review are extended until the date when the participation requirement in paragraph 3 of the proposed Resolution on the Eleventh Review has been reached (paragraph 7 of proposed Resolution). ### Payment composition and reserve asset provisions - Article III, Section 3(a): 25 percent of any increase in quota shall be paid in special drawing rights (SDRs), or, as allowed, in currencies of other members specified by the Fund, subject to their concurrence. - Paragraph 8 of the Resolution: 25 percent of the increase should be paid in SDRs or in currencies of other members selected by the Fund, subject to their concurrence, or in any combination of SDRs and such currencies. The balance of the increase shall be paid in a member’s own currency. - A reserve asset payment will enlarge or create a reserve tranche position of equivalent amount. - The Fund stands ready to assist members that do not hold sufficient reserves to make their reserve asset payments by facilitating SDR borrowing from other members willing to cooperate; such loans would be repaid on the same day from SDR proceeds of drawings of reserve tranche positions established by the payment of SDRs. ### Executive Board considerations and policy guidance - The Board emphasized: - The Fund is the central institution in the international monetary system and must be adequately endowed with financial resources to act effectively when dealing with members’ balance of payments difficulties; - Fund resources must be fully safeguarded, provided on a temporary basis so resources revolve, and supported by appropriate member policies backed by use of the Fund’s general resources; - The Fund must hold a level of usable assets sufficient to protect liquidity and immediate usability of members’ claims on the Fund. - Factors taken into account in assessing the size of quota increase included: - Growth of world trade and payments since 1990; - Scale of potential payments imbalances, including those from sharp changes in capital flows; - Prospective demand for Fund resources, including support for growth-oriented adjustment programs involving economic and structural reforms; - Rapid globalization and liberalization of trade and payments since 1990; - The Fund’s current and prospective liquidity position and adequacy of borrowing arrangements (GAB and prospective NAB) as buttresses but not substitutes for larger quotas. - The Executive Board reiterated that the Fund should continue to rely on quota resources as its principal form of financing and resort to borrowing only in exceptional circumstances. - Members should approach the Fund at an early stage of balance of payments difficulties and take steps to maintain market confidence through adequate and transparent policy actions and timely provision of economic and financial information. ### Procedural and inclusivity safeguards - Directors confirmed no intention to re-open issues of size and composition of the Executive Board; existing representation of developing countries should not be affected. - When considering extensions of consent or payment periods, the Executive Board shall give particular consideration to members that may still wish to consent or pay, including members with protracted arrears who are judged to be cooperating with the Fund toward settlement of these obligations. ### Key numerical outcomes and selected proposed quotas (Annex highlights) - Total quotas increased by 45 percent: from approximately SDR 146 billion to approximately SDR 212 billion. - Rounding rule: nearest multiple of SDR 0.1 million. - Selected proposed quotas (In millions of SDRs): - United States: 37,149.3 - Japan: 13,312.8 - Germany: 13,008.2 - France: 10,738.5 - United Kingdom: 10,738.5 - Saudi Arabia: 6,985.5 - Russia: 5,945.4 - Netherlands: 5,162.4 - Belgium: 4,605.2 - China: 4,687.2 - India: 4,158.2 - Brazil: 3,036.1 - Spain: 3,048.9 - Switzerland: 3,458.5 - Canada: 6,369.2 - The Annex lists proposed quotas for all members (each expressed in millions of SDRs as presented). *Source: APPENDIX III — Annex to Resolution No. 53-2, Annual Report 1998* ### APPENDIX III ### APPENDIX III ### Executive Board action and Resolution No. 52-4 - Executive Board actions (Decision No. 11578-(97/96), September 19, 1997): - (a) adopts the Report of the Executive Board to the Board of Governors on the Proposed Fourth Amendment of the Articles of Agreement of the International Monetary Fund; - (b) proposes the introduction in the Articles of Agreement of the modifications included in the Proposed Fourth Amendment attached to the Resolution in Part IV of the Report; - (c) recommends the adoption by the Board of Governors of the Resolution in Part IV of the Report. - Board of Governors RESOLVES: 1. The proposals for modifications (Proposed Fourth Amendment) attached to this Resolution and to be incorporated in the Articles of Agreement are approved. 2. The Secretary of the Fund is directed to ask, by circular letter, telegram, or other rapid means of communications, all members of the Fund whether they accept, in accordance with the provisions of Article XXVIII of the Articles, the Proposed Fourth Amendment. 3. The circular letter, telegram, or other communication shall specify that the Proposed Fourth Amendment shall enter into force for all members as of the date on which the Fund certifies, by formal communication addressed to all members, that three-fifths of the members, having eighty-five percent of the total voting power, have accepted the modifications. ### Proposed Fourth Amendment — key textual changes - Amendment to Article XV, Section 1: - (a) authorizes the Fund to allocate special drawing rights in accordance with Article XVIII to members that are participants in the Special Drawing Rights Department. - (b) adds that, in addition, the Fund shall allocate special drawing rights to members that are participants in the Special Drawing Rights Department in accordance with the provisions of Schedule M. - A new Schedule M is to be added, titled "Special One-Time Allocation of Special Drawing Rights." ### Schedule M — Special One-Time Allocation: principal provisions and mechanics - General rule (paragraph 1): - Each member that, as of September19, 1997, is a participant in the Special Drawing Rights Department shall, on the 30th day following the effective date of the fourth amendment of this Agreement, receive an allocation of special drawing rights in an amount that will result in its net cumulative allocation of special drawing rights being equal to 29.315788813 percent of its quota as of September19, 1997, provided that, for participants whose quotas have not been adjusted as proposed in Resolution No. 45-2 of the Board of Governors, calculations shall be made on the basis of the quotas proposed in that resolution. - New participants (paragraph 2): - (a) A country that becomes a participant after September 19, 1997 but within three months of the date of its membership in the Fund shall receive an allocation on the 30th day following the later of: (i) the date it becomes a participant in the SDR Department, or (ii) the effective date of the fourth amendment. - (b) The allocation shall result in a net cumulative allocation equal to 29.315788813 percent of its quota as of the date it becomes a participant, adjusted: - (i) first, by multiplying 29.315788813 percent by the ratio of the total of quotas, as calculated under paragraph 1, of the participants described in (c) to the total of quotas of such participants as of the date on which the member became a participant; - (ii) second, by multiplying the product of (i) above by the ratio of the total of the sum of the net cumulative allocations of SDRs received under Article XVIII of the participants described in (c) as of the date on which the member became a participant and the allocations received by such participants under paragraph 1 to the total of the sum of the net cumulative allocations of SDRs received under Article XVIII of such participants as of September 19, 1997 and the allocations received by such participants under paragraph 1. - (c) For adjustments under (b), the relevant participants are those that: (i) were participants as of September 19, 1997 and continue to be participants as of the date the member became a participant, and (ii) have received all allocations made by the Fund after September 19, 1997. - Federal Republic of Yugoslavia (Serbia/Montenegro) succession (paragraph 3): - (a) If the Federal Republic of Yugoslavia (Serbia/Montenegro) succeeds to membership and participation of the former Socialist Federal Republic of Yugoslavia in accordance with Executive Board Decision No. 10237-(92/150), adopted December 14, 1992, it shall receive an allocation on the 30th day following the later of: (i) the date it succeeds to membership and participation under Decision No. 10237-(92/150), or (ii) the effective date of the fourth amendment. - (b) The allocation shall result in net cumulative allocation equal to 29.315788813 percent of the quota proposed to it under paragraph 3(c) of Executive Board Decision No. 10237-(92/150), as adjusted in accordance with 2(b)(ii) and (c) above as of the date it qualifies for an allocation. - Opt-out (paragraph 4): - The Fund shall not allocate SDRs under this Schedule to participants that have notified the Fund in writing prior to the date of the allocation of their desire not to receive the allocation. - Escrow and overdue obligations (paragraph 5): - (a) If, at the time of allocation under paragraphs 1, 2, or 3, the participant has overdue obligations to the Fund, the SDRs allocated shall be deposited and held in an escrow account within the SDR Department and shall be released to the participant upon discharge of all its overdue obligations to the Fund. - (b) SDRs held in an escrow account shall not be available for any use and shall not be included in any calculations of allocations or holdings of SDRs for the purposes of the Articles, except for calculations under this Schedule. If SDRs allocated to a participant are held in escrow when the participant terminates its participation in the SDR Department or when it is decided to liquidate the SDR Department, such SDRs shall be canceled. - (c) Overdue obligations to the Fund for purposes of this paragraph consist of overdue repurchases and charges in the General Resources Account, overdue principal and interest on loans in the Special Disbursement Account, overdue charges and assessments in the SDR Department, and overdue liabilities to the Fund as trustee. - (d) Except for the provisions of this paragraph, the principle of separation between the General Department and the SDR Department and the unconditional character of SDRs as reserve assets shall be maintained. - Entry into force and adoption: - The Board of Governors adopted the foregoing Resolution, effective September 23, 1997. ### Procedural and governance thresholds (preserved verbatim) - Entry into force condition: certification that three-fifths of the members, having eighty-five percent of the total voting power, have accepted the modifications. - Effective date cited: allocations to be made on the 30th day following the effective date of the fourth amendment (and specific triggering dates for new participants as described above). - Exact allocation target: 29.315788813 percent (applied to quotas as specified). --- ### Relations with other international organizations (overview drawn from subsequent sections) - IMF–World Bank: - April 1997 Joint Statement by the Managing Director of the IMF and the President of the World Bank led to an agreement on strengthening collaboration mechanisms for financial sector issues; agreement discussed by Executive Boards and implementation underway. - Roles clarified: Bank focuses on sectoral and developmental aspects of financial systems in developing countries; IMF focuses on macroeconomic aspects of financial systems and markets in all member countries. - Closer collaboration on social impacts of policy advice and on HIPC Initiative implementation; IMF and World Bank staff initiate creditor consultations prior to the “decision point,” and Managing Director and President send a joint letter to creditors immediately following decision and completion points. - IMF–United Nations: - Collaboration at institution-wide and country levels; IMF Office at the UN in New York supports increased IMF participation in UN committees and statistical collaboration and postconflict situations. - IMF Office in Geneva works with UNCTAD on trade-related issues. - April 1998: IMF Managing Director attended the UN ECOSOC Special High-Level Meeting on “Global Financial Integration and Development and Recent Issues.” - Country-level interaction: IMF staff interact with UN resident coordinators, participate in heads-of-agency meetings, and contribute to Country Strategy Notes and UNDAF. - IMF–WTO: - Cooperation Agreement effective December 1996; implementation covers institutional and staff consultations, staff attendance at each other’s meetings, and exchange of documents and information. - A working group of senior staff from the IMF, the WTO, and the World Bank studies initiatives on greater coherence in global economic policymaking; the Director-General of the WTO noted in November 1997 that working relationships had been fruitful. - IMF participates in the Integrated Initiative for Least-Developed Countries’ Trade Development and committed in principle to provide technical assistance to 27 countries by the end of the financial year. - IMF–ILO: - Collaboration strengthened in recognition of complementarity between macroeconomic stability and higher employment. - IMF staff attended ILO-sponsored Asian Regional Conference (December 9–11, 1997) and the ILO High-Level Tripartite Meeting on the Social Responses to the Financial Crisis in East Asian Countries (April 22–24, 1998). - Contacts between IMF and ILO officials and labor union organizations increased substantially in 1997/98. - Cooperation with regional development banks: - Intensified in 1997/98, particularly concerning the HIPC Initiative. - On July 21, 1997, the IMF Executive Board approved a proposal to allow representatives of multilateral creditors to attend country-specific Board discussions on HIPC Initiative matters. - Collaboration includes consultation on structural adjustment programs, coordination of technical assistance, exchange of information, staff visits, and meeting attendance. - Role of IMF management and external communications: - Managing Director engaged with UN, Bank for International Settlements, OECD, and other organizations; addressed UN Second Committee on the Asian crisis in October 1997. - Consultations with the OECD in May followed by attendance at its Ministerial Meeting in November. - May 1998: Managing Director inaugurated the IMF-Singapore Regional Training Institute. - IMF expanded media contacts, publications, data dissemination, website use, and engagement with academic, corporate, and civil society audiences to promote understanding of policies and enhance public accountability. *Source: APPENDIX III, _file09pdf - APPENDIX III* ### APPENDIX V ### APPENDIX V ### External communications and outreach - The IMF uses a range of instruments to communicate with audiences and correct misconceptions, including speeches, seminars, conferences, and management and staff contacts with nonofficials (media, academics, corporate sector, civil society). - Speeches, especially by the Managing Director, are central for setting out IMF views on major economic and financial issues and offering ideas for public consideration. - Seminars and conferences engage professional peers, regional groups of journalists, policymakers, and civil society, and allow the IMF to hear alternative views. - Management and staff media contacts range from one-on-one interviews and small briefings to press conferences (e.g., World Economic Outlook release). - Resident representatives and staff in overseas offices have an enhanced role in explaining the IMF’s work; heads of missions increasingly give press briefings at the conclusion of staff visits. - IMF missions more routinely interact with the academic community, the corporate sector, and civil society. - The IMF launched its external website in 1996 at http://www.imf.org; by end-1997/98: - total visits from outside the IMF averaged about one million a month, nearly five times the level a year earlier; - in May 1998, 32 percent of visitors were identified as U.S.-based and 41 percent as outside the United States. ### Initiatives in 1997/98 to increase openness - Management and staff gave an unprecedented number of speeches, press conferences, and on-the-record interviews to a broad spectrum of the media. - Conducted extensive outreach in Asia—including public information visits and briefings for journalists—prior to the Hong Kong Annual Meetings. - Established an Office for Asia and the Pacific in Tokyo, whose functions include external communications. - Expanded issue-oriented and regional seminars (example: seminar on Asia and the IMF in Hong Kong prior to the 1997 Annual Meetings) and introduced seminars at the Joint Vienna Institute for parliamentarians from economies in transition. - Published results of an external evaluation of the Enhanced Structural Adjustment Facility. - Launched a new IMF-sponsored Finance & Development, stepped up coverage through the Economic Issues series, and introduced IMF Economic Reviews (a collection of current Press [now “Public”] Information Notices). - Increased use of the Internet to disseminate information and publications, and for the first time made available online Letters of Intent and Memoranda of Economic and Financial Policies of member countries. - The Executive Board called for a review and assessment of the IMF’s communications strategy and performance to be completed in 1998/99. ### Periodic publications and pricing highlights - Balance of Payments Statistics Yearbook, Vol. 48, 1997. A two-part yearbook. $68.00 a year. - Direction of Trade Statistics: Quarterly, with yearbook. $110.00 a year. $55.00 to full-time university faculty members and students. $32.00 for yearbook only. - Government Finance Statistics Yearbook, Vol. 21, 1997. $60.00. - International Financial Statistics: Monthly, with yearbook (English, French, and Spanish). $246.00 a year. $123.00 to full-time university faculty members and students. $65.00 for yearbook only. - Financial Statistics is also available on CD-ROM (price information available on request). - Staff Papers: Four times a year. $56.00 a year. $28.00 to full-time university faculty members and students. - Finance and Development: Quarterly (English, Arabic, Chinese, French, and Spanish). Free. Airspeed delivery, $20.00. - IMF Survey: Twice monthly, but only once in December (English, French, and Spanish). Private firms and individuals are charged at an annual rate of $79.00. ### Occasional Papers and pricing - Nos. 151–161 listed (titles and authors preserved in source). Availability and prices: - Occasional Papers Nos. 151–53: $15.00 each; $12.00 each to full-time university faculty members and students. - Occasional Papers Nos. 154–61: $18.00 each; $15.00 each to full-time university faculty members and students. ### World Economic and Financial Surveys pricing highlights - World Economic Outlook: Twice a year (May and October). $36.00 ($25.00 to full-time university faculty and students). - Staff Studies for the World Economic Outlook. $25.00 ($20.00 to full-time university faculty and students). - World Economic Outlook: Interim Assessment, December 1997. $36.00 ($25.00 to full-time university faculty and students). - International Capital Markets: Developments, Prospects, and Policy Issues. $20.00 ($12.00 to full-time university faculty and students). - Official Financing for Developing Countries. $25.00 ($20.00 to full-time university faculty and students). - Toward a Framework for Financial Stability. $25.00 ($20.00 to full-time university faculty and students). - Trade Liberalization in IMF-Supported Programs. $25.00 ($20.00 to full-time university faculty and students). ### Books, series, and free materials - Numerous books and seminar volumes listed with exact prices (examples preserved in source): $15.00, $29.50, $27.00, $65.00, $20.00, $35.00, $22.50, $15.00, $35.00, $22.50, etc. - Economic Issues series Nos. 8–14 listed; all marked Free. - Pamphlet No. 51 (Debt Relief for Low-Income Countries: The HIPC Initiative) — Free. - Booklets such as The Challenges of Globalization in an Interdependent World Economy and Good Governance: The IMF’s Role — Free. - Working Papers and Papers on Policy Analysis and Assessment: - Working Papers 97/46–97/182 and 98/1–98/62 were issued in 1997/98. $7.00 each; $210.00 for annual subscription. - Papers on Policy Analysis and Assessment 97/4–97/11 and 98/1–98/2 were issued in 1997/98. $7.00 each; $80.00 for annual subscription. - Staff Country Reports 97/25–97/121 and 98/1–98/30 were issued in 1997/98. $15.00 each. ### Distribution and ordering - Copies of IMF publications may be obtained from Publication Services, International Monetary Fund, 700 19th Street, N.W., Washington, D.C. 20431, U.S.A. - Telephone: (202) 623-7430 - Telefax: (202) 623-7201 - E-mail: publications@imf.org - Internet: http://www.imf.org - Additional information about the IMF and its publications, including the current Publications Catalog and a searchable IMF Publications Database, is available on the IMF’s website (http://www.imf.org). - Items marked with an asterisk (*) are available in English in full text on the IMF’s website (http://www.imf.org). ### Forty-Ninth Interim Committee Meeting — Hong Kong, China, September 21, 1997 - Chair: Mr. Philippe Maystadt, Deputy Prime Minister and Minister of Finance and Foreign Trade of Belgium. - Committee assessment of global prospects: - Welcomed generally favorable prospects for continued expansion of world output and trade, but noted country-level risks that could affect the world economy if not decisively addressed. - Advanced economies: - Growth with low inflation projected to continue. - Sustained fiscal consolidation remains a challenge requiring resolute policies over the near and medium term. - Exchange rates among major currencies should reflect economic fundamentals; avoid large external imbalances. - In high resource-use countries (including the United States), monetary policy must guard against reemergence of inflation. - Continental Europe: monetary policy should remain consistent with sustained expansion of domestic demand. - Japan: achieve domestic demand-led growth with supportive monetary policy, proceed vigorously with structural reform, and further consolidate fiscal position over the medium term. - High structural unemployment in several European countries calls for determined efforts to increase efficiency and adaptability in labor and product markets and reform tax, social benefits, and entitlement systems. - Developing countries: - Growth performance and prospects strengthened in recent years, but further improvements are needed to achieve significant reductions in poverty. - Need for macroeconomic discipline and accelerated structural reforms, including “second-generation” reforms: strengthen public administration and financial sector management, develop human capital, promote basic infrastructure, and foster a conducive and transparent environment for private investment. - Emerging market economies: - Some face large external imbalances and fragile banking systems that have adversely affected investor confidence and exacerbated risks from volatile capital movements. - Transition countries: - Growth has resumed following good progress in macroeconomic stabilization and structural reforms in most cases. - Strengthening growth performance depends on speeding up legal, institutional, and other reforms to encourage private economic activity and investment. - To safeguard achievements, inflation will in most cases need to be lowered further through disciplined macroeconomic policies. - Committee views on EMU and globalization: - Welcomed progress toward a successful European Economic and Monetary Union (EMU) contributing to international monetary stability. - Noted convergence in Europe and commitment to start EMU on schedule as a sound basis for transition to the euro on January 1, 1999. - Emphasized that ensuring a solid and stable EMU requires participants to meet the fiscal requirements of the Stability and Growth Pact and address root causes of Europe’s high unemployment. - Reaffirmed the vital contribution of globalization to economic growth worldwide and urged adherence to the Committee’s “Declaration on Partnership for Sustainable Global Growth.” - Welcomed IMF adoption of guidelines on governance issues and efforts to enhance financial system soundness, notably the establishment of the “Core Principles of Effective Banking Supervision” developed by the Basle Committee in conjunction with supervisory authorities in a number of emerging market economies. - Noted that recent disturbances in Asian financial markets underscored the importance of: - Ensuring internal consistency of macroeconomic policies; - Strengthening financial systems; - Avoiding excessive external deficits and reliance on short-term financing. *Source: APPENDIX V, EXTERNAL RELATIONS, ANNUAL REPORT 1998.* ### APPENDIX VI ### APPENDIX VI ### Press Communiqués — Interim Committee overview and response to Asian turmoil - The Committee noted that "the impact of recent financial market turmoil on some of the countries affected is expected to result in a slowdown of growth in the near term," while emphasizing that "the countries' economic fundamentals remain solid and their longer-term outlook is favorable, provided the required adjustment policies are sustained." - The Committee observed that "the recent Asian experience has illustrated that rising capital flows may require some adaptation of exchange rate arrangements to changing circumstances." - Regardless of exchange rate arrangements, "the maintenance of appropriate macroeconomic and structural policies consistent with the arrangement remains crucial." - The Committee commended the Fund for "prompt and effective response to the events in Asia" and invited the Executive Board to examine further lessons and "report its findings to the next meeting of the Committee." - Emphasized analytical issues raised by recent developments, including prevention of crises and contagion effects, and stressed "the importance of openness and accountability of economic policymaking, and of transparency, to achieving policy credibility and confidence building in a globalized environment." - Welcomed the Fund’s Special Data Dissemination Standard and the voluntary release of Press Information Notices on conclusions of Fund surveillance; "looked forward to the strengthening of the Fund’s Special Data Dissemination Standard." ### Liberalization of capital movements — policy position and procedural steps - The Committee reiterated its support for "an open and liberal system of capital movements, supported by sound macroeconomic policies and strong financial systems." - Adopted the Statement on "The Liberalization of Capital Movements Under an Amendment of the Fund’s Articles" and considered that "an amendment of the Fund’s Articles will provide the most effective means of promoting an orderly liberalization of capital movements consistent with the Fund’s role in the international monetary system." - Requested the Executive Board "to accord high priority to completing its work and submitting a report and a proposed draft amendment to the Board of Governors." ### Agreed increases in quotas under the Eleventh General Review - The Committee welcomed Executive Board agreement on both the size and distribution method of quota increases and agreed that: - "The present total of Fund quotas would be increased by 45 percent;" - "Seventy-five percent of the overall increase would be distributed in proportion to present quotas;" - "Fifteen percent of the overall increase would be distributed in proportion to members’ shares in calculated quotas (based on 1994 data), so as to better reflect the relative economic positions of members; and" - "The remaining 10 percent of the overall increase would be distributed among those members whose present quotas are out of line with their positions in the world economy (as measured by the excess of their share in calculated quotas over their share in actual quotas), of which 1 percent of the overall increase would be distributed among five members whose current quotas are far out of line with their relative economic positions, and which are in a position to contribute to the Fund’s liquidity over the medium term." - Requested the Executive Board "to submit before the end of this year a proposed resolution for the approval of the Board of Governors to effect the agreed increases in quotas." - Reiterated view that "the formulas used to calculate quotas should be reviewed by the Board promptly after the completion of the Eleventh General Review." ### SDR one-time allocation - Welcomed Executive Board agreement on an amendment to provide "all members with an equitable share of cumulative SDR allocations through a special one-time SDR allocation amounting to SDR 21.4 billion, which will double the amount of SDRs already allocated." - Recommended adoption by the Board of Governors of the proposed Resolution. ### HIPC, ESAF, and financing concerns - Welcomed progress on the HIPC Initiative, including Fund and Bank decisions "in principle" to provide assistance to Uganda, Bolivia, and Burkina Faso, and preliminary discussions on Côte d’Ivoire, Guyana, and Mozambique. - Encouraged eligible countries "to expeditiously take the necessary adjustment measures to benefit from this special assistance." - Noted continuing efforts to secure resources needed to complete financing of the ESAF and HIPC initiatives and observed that "further steps to secure the timely funding of these initiatives would have to be considered soon." ### Statement of the Interim Committee on the Liberalization of Capital Movements — key principles - Framing: - "Private capital flows have become much more important to the international monetary system" and "an increasingly open and liberal system has proved to be highly beneficial to the world economy." - Liberalization, "provided it is introduced in an orderly manner, and backed both by adequate national policies and a solid multilateral system for surveillance and financial support," is "an essential element of an efficient international monetary system." - The IMF's "central role in the international monetary system, and its near universal membership, make it uniquely placed to help this process." - Cautions and implementation: - International capital flows are "highly sensitive" to monetary system stability, macroeconomic policy quality, and domestic financial system soundness. - The recent turmoil "demonstrated again the importance of underpinning liberalization with a broad range of structural measures, especially in the monetary and financial sector." - Emphasized phased and comprehensive approach, tailoring capital account liberalization to individual country circumstances. - Role of the Fund: - The Fund "will have the task of assisting in the establishment of such a system and stands ready to support members’ efforts in this regard." - Invited the Executive Board "to complete its work on a proposed amendment of the Fund’s Articles that would make the liberalization of capital movements one of the purposes of the Fund, and extend, as needed, the Fund’s jurisdiction through the establishment of carefully defined and consistently applied obligations regarding the liberalization of such movements." - Recognized necessity of "safeguards and transitional arrangements," "flexible approval policies," and respect for members’ obligations under other international agreements. - Invited the Executive Board "to give a high priority to the completion of the required amendment of the Fund’s Articles of Agreement." ### Interim Committee attendance (September 21, 1997) - Chairman: Philippe Maystadt, Deputy Prime Minister, Minister of Finance and Minister of External Trade of Belgium - Managing Director: Michel Camdessus - Members/Alternates included representatives such as Ahmad Mohd Don; Ibrahim A. Al-Assaf; Erik Åsbrink; Gordon Brown; P. Chidambaram; Carlo Azeglio Ciampi; Peter Costello; Dai Xianglong; Rodrigo de Rato Figaredo; Marcel Doupamby Matoka; Sergei Dubinin; Roque B. Fernández; Abdelouahab Keramane; Sultan Bin Nasser Al-Suwaidi (Alternate); Pedro Sampaio Malan; Justin C. Malewezi; Gordon Thiessen (a.m. session) and James A. Judd (p.m. session) (Alternate for Paul Martin); Jean-Claude Juncker (a.m. session) and Wolfgang Ruttenstorfer (p.m. session) (Alternate for Philippe Maystadt); Hiroshi Mitsuzuka; Robert E. Rubin; Dominique Strauss-Kahn; Kaspar Villiger; Theo Waigel; Gerrit Zalm. - Observers included Yilmar Akyuz; Andrew D. Crockett; Yves-Thibault de Silguy; Driss Jettou; Donald J. Johnston; Rilwanu Lukman; Rubens Ricupero; Jesús Seade; James D. Wolfensohn. ### Fiftieth Meeting, Washington, D.C., April 16, 1998 — World Economic Outlook and policy guidance - Overall assessment: - "While the countries at the center of the crisis will suffer significantly from the recent financial turmoil in Asia, the global outlook for world economic growth can be regarded as cautiously optimistic." - This reflects "continued strong performance expected in most industrial countries," "sustained corrective policies in emerging market countries that helped avert a wider crisis," and "progress in much of the developing world and among the transition countries in improving medium-term fundamentals." - Downside risks and required actions: - Among crisis countries: "determined implementation of agreed policy programs is essential to restore confidence and sustainable growth," including "appropriately firm monetary policies," "fiscal discipline," and "implementation, without delay, of structural reforms, especially in the financial sector." - In Japan: "both fiscal and structural measures, including comprehensive regulatory and financial sector reforms, are needed to secure an early and lasting recovery." Welcomed "the recent announcement of the economic policy package" and stressed that support to the banking system "should be accompanied by appropriate action on closure or consolidation," and be "part of a coherent medium-term policy framework." - Industrial countries near capacity (including the United States and the United Kingdom) should "remain vigilant as always to inflation risks." In the United States "prospective fiscal surpluses should help to address the issue of the low national savings rate." - Continental Europe: welcomed economic convergence toward EMU participation; "further progress with fiscal consolidation is desirable in a number of countries" to provide "needed scope for policy flexibility within the Stability and Growth Pact," and called for continued structural reforms, "especially in labor markets." - Developing countries: focus on "sound macroeconomic policies, open markets, and structural reforms—particularly building soundly managed and supervised market-oriented financial sectors." urged continued strengthening of policies, including "containing external balances, avoiding overheating, strengthening the financial system, and enhancing data provision." - Africa: "strong structural adjustment policies and continued support from the international community are needed" to sustain progress in raising living standards; warned that "sharp declines in oil and other commodity prices pose considerable challenges" and "could temporarily affect growth and investment and slow progress in reducing poverty, especially in some African countries." - Transition countries: noted move to positive growth with lower inflation in 1997 but many still need to "reduce fiscal deficits by strengthening revenue collection and improving the efficiency of social security and welfare systems and of governmental services more generally." ### Strengthening the architecture of the international monetary system — prevention, management, resolution of crises - The Committee identified pillars for action to prevent and resolve crises, noting globalization's benefits and challenges. - Pillar a: Strengthened international and domestic financial systems - "Sound and stable macroeconomic policies are critical to financial stability." - Need to strengthen domestic financial systems via supervisory and regulatory frameworks "consistent with internationally accepted practices and strengthened standards for bank and nonbank financial entities." - Noted work in various forums, "notably the Basle Committee’s Core Principles for strengthening banking regulation and supervision." *Source: APPENDIX VI, ANNUAL REPORT 1998 (Press Communiqués).* ### APPENDIX VI ### APPENDIX VI ### Strengthened Fund Surveillance and Recommendations - Fund should intensify surveillance of financial sector issues and capital flows, with particular attention to policy interdependence and risks of contagion. - Enhanced surveillance should focus on risks posed by potentially abrupt reversals of capital flows, particularly short-term flows; Executive Board requested to examine ways to strengthen monitoring of capital flows. - Fund and World Bank to pursue most effective forms of joint collaboration, possibly drawing on outside expertise, to advise members on strengthening the financial sector. - Need for Fund views to be effectively communicated to members and brought to bear in members’ policy deliberations; Executive Board requested to develop a “tiered response” to give increasingly strong warnings to countries believed to be seriously off course in their policies. ### Greater Availability and Transparency of Information - Members have obligation to provide timely and accurate data to the Fund; persistent deficiencies can lead to delay in conclusion of Article IV consultations. - Progress welcomed on implementation of the Special and General Data Dissemination Initiatives. - Fund requested to expedite efforts to broaden and strengthen the Special Data Dissemination Standard (SDDS) to cover additional financial data, including: - net reserves (reserve-related liabilities, central bank derivative transactions and positions); - debt, particularly short-term debt; - indicators of the stability of the financial sector. - Emphasis on encouraging more members to subscribe to the SDDS and supporting members to improve data compilation with Fund technical assistance. - Importance of subscribers being in full observance of the SDDS by the end of the transition period in December 1998; consideration to increase its usefulness, accessibility to the public and market participants, and publication of compliance. - Fund requested to continue increasing dissemination of information on policy recommendations; members encouraged to increase transparency of their policies. - Encouraged that more members release Press Information Notices on Article IV consultation conclusions; upcoming review welcomed as opportunity to take stock. ### Central Role of the Fund in Crisis Management - Committee welcomed timely international response to the crisis, including establishment of the Supplemental Reserve Facility and use of emergency procedures for rapid Fund support. - Fund’s role in responding to large financing needs should remain central because of conditionality supporting necessary reforms; Fund expected to catalyze other financing and coordinate support when needed, but cannot finance whatever large balance of payments deficit. - Noted sharp weakening of the Fund’s liquidity position; stressed need to ensure Fund has adequate resources. - Called for rapid implementation of the increase in quotas approved by the Board of Governors in January 1998 and of the New Arrangements to Borrow. ### Private Sector Involvement in Crisis Prevention and Resolution - Private sector creditors should more fully bear consequences of their actions; discouraging excessive reliance on short-term financing and strengthening countries’ capacity to withstand sudden shifts in market sentiment are essential preventive elements. - When warranted by crisis situations, private creditors should be involved at an early stage to achieve equitable burden sharing vis-à-vis the official sector and to limit moral hazard; Executive Board requested to intensify consideration of steps to strengthen private sector involvement. - Strengthen incentives for creditors and investors to use information better to analyze risks and avoid excessive risk taking. - Possible mechanisms suggested (for further study by Executive Board): - closer contacts with creditors to explain Fund arrangements and catalyze private sector financing; - studying provisions in bond contracts for bondholders to be represented, in case of nonpayment, in negotiations on bond contract restructuring; - extending Fund’s policy of providing financing to members in arrears on debt payments to some private creditors under appropriate safeguards; - encouraging adoption of strong bankruptcy systems for domestic and international capital markets; - advising caution with respect to public guarantees to reduce risk of private debt problems turning into sovereign debt problems. - Executive Board requested to report on all aspects of its work in these areas at the next Committee meeting. ### Liberalization of Capital Movements (Amendment of the Articles) - Financial crisis in Asia highlighted importance of orderly and properly sequenced liberalization of capital movements, appropriate macroeconomic and exchange rate policies, sound financial sectors, and effective prudential and supervisory systems. - Committee reaffirmed view that it is time to add a new chapter to the Bretton Woods Agreement by making liberalization of capital movements one of the purposes of the Fund and extending Fund jurisdiction as needed. - Noted progress and provisional Executive Board agreement on the part of the amendment dealing with the Fund’s purposes; requested Executive Board to pursue work on other aspects, including policy issues, aiming to submit an appropriate amendment of the Articles for Committee consideration as soon as possible. ### Code of Good Practices on Fiscal Transparency — Declaration on Principles - Code adopted to guide members to increase fiscal transparency, enhance accountability and credibility of fiscal policy, and serve as a key feature of good governance. - Members encouraged to adhere to the principles and implement practices; IMF to monitor progress in implementing the Code in surveillance. - Code’s key objectives: - clarity of roles and responsibilities in government; - provision of information on government activities to the public; - open budget preparation, execution, and reporting; - fiscal information subject to independent assurances of integrity. - A supporting manual with implementation guidelines is being developed; IMF to provide technical assistance in cooperation with other international organizations as requested. - Modifications to the Code to be considered periodically in light of implementation experience. Key elements of the Code (principles and practices): - I. Clarity of Roles and Responsibilities - 1.1 Government sector should be clearly distinguished from the rest of the economy; general government comprises central government and lower levels, including extrabudgetary operations. - 1.1.2 Government involvement in the rest of the economy should be open and public on the basis of clear rules and procedures applied nondiscriminatorily. - 1.1.3 Allocation of responsibilities between levels of government and branches should be clearly defined. - 1.1.4 Clear mechanisms for coordination and management of budgetary and extrabudgetary activities and arrangements vis-à-vis other government entities (e.g., central bank, state-controlled enterprises) should be specified. - 1.2 Fiscal management should be governed by comprehensive laws and administrative rules; any government commitment or expenditure should have legal authority. - 1.2.2 Taxes, duties, fees, and charges should have an explicit legal basis; tax laws and regulations should be accessible and understandable. - 1.2.3 Ethical standards for public servants should be clear and well publicized. - II. Public Availability of Information - 2.1 Full information on past, current, and projected fiscal activity should be provided. - 2.1.1 Annual budget should cover all central government operations in detail and provide information on central government extrabudgetary operations; sufficient information on lower levels of government revenue and expenditure to present a consolidated general government position. - 2.1.2 Information comparable to that in the annual budget should be provided for the outturns of the two preceding fiscal years, and forecasts for the two years following the budget. - 2.1.3 Statements with the annual budget should describe contingent liabilities, tax expenditures, and quasi-fiscal activities. - 2.1.4 Central government should regularly publish level and composition of its debt and financial assets. - 2.2 Public commitment to timely publication of fiscal information (e.g., specific commitments in a budget law; advance release date calendars). - III. Open Budget Preparation, Execution, and Reporting - 3.1 Budget documentation should specify fiscal policy objectives, the macroeconomic framework, policy basis for the budget, and identifiable major fiscal risks. - 3.1.1 Statement of fiscal policy objectives and assessment of sustainable fiscal policy to provide framework for annual budget. - 3.1.2 Any fiscal rules adopted should be clearly specified. - 3.1.3 Annual budget to be presented within consistent quantitative macroeconomic framework, with economic assumptions and key parameters provided. - 3.1.4 Distinguish existing commitments from new policies in the annual budget. - 3.1.5 Major risks to the annual budget should be identified and quantified where possible. - 3.2 Budget estimates should be classified and presented to facilitate policy analysis and accountability: - transactions on a gross basis distinguishing revenue, expenditure, and financing; classify expenditures on economic and functional bases and by administrative category; present budget data to allow international comparisons. - statement of objectives for major budget programs. - overall balance of the general government as a standard summary indicator, supplemented by operational, structural, and primary balances as appropriate. - annual budget and final accounts should include statement of accounting basis (cash or accrual) and standards used. - 3.3 Procedures for execution and monitoring of expenditures should be specified: - comprehensive, integrated accounting system to assess payments arrears; - standardized procurement and employment procedures accessible to all; - budget execution internally audited with audit procedures open to review. - 3.4 Fiscal reporting should be timely, comprehensive, reliable, and identify deviations from the budget: - regular, timely reporting of budget and extrabudgetary outturns compared with original estimates; provide indicators for lower levels of government in absence of detailed information; - timely, comprehensive, audited final accounts of budget operations and full information on extrabudgetary accounts to legislature; - report results achieved relative to objectives of major budget programs to legislature. - IV. Independent Assurances of Integrity - 4.1 Fiscal information integrity subject to public and independent scrutiny: - a national audit body, appointed by the legislature, should provide timely reports to legislature and public on financial integrity of government accounts; - macroeconomic forecasts (including assumptions) should be available for scrutiny by independent experts; - integrity of fiscal statistics enhanced by providing national statistics office with institutional independence. ### ESAF and HIPC Initiatives — Implementation, Financing, and Evaluation - Welcomed progress in HIPC Initiative implementation, including: - release by Executive Boards of Fund and Bank of assistance for Uganda when it reached its completion point in early April; - decisions in principle to provide assistance to Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, and Mozambique; - preliminary discussions on Guinea-Bissau and Mali. - Encouraged countries that could qualify for HIPC assistance to take expeditiously the necessary adjustment measures to qualify. - Noted need to reactivate efforts to secure full financing of the ESAF and the HIPC Initiative. - Urged all members to move quickly to complete financing of these initiatives as soon as possible due to present and expected future commitments and significant costs from delay; Executive Board to report back to Interim Committee at next meeting. - Appreciated external evaluators’ work on ESAF; external and internal evaluations reaffirmed ESAF as a valuable instrument to assist low-income countries and provide lessons for strengthening Fund operations; Executive Board to draw operational conclusions. ### Meetings and Next Steps - Next meeting of the Interim Committee: Washington, D.C. on October 4, 1998. - Interim Committee requested Executive Board reports on surveillance, private sector involvement work, and financing of ESAF/HIPC at next meetings. ### Annex: Interim Committee Attendance (selected) - Meeting date: April 16, 1998 - Chairman: Philippe Maystadt, Deputy Prime Minister, Minister of Finance and Minister of External Trade of Belgium - Managing Director: Michel Camdessus - Selected Members or Alternates listed in attendance: Ibrahim A. Al-Assaf; Gordon Brown; Chaiyawat Wibulswasdi; Cassim Chilumpha; Carlo Azeglio Ciampi; Peter Costello; Liu Mingkang (Alternate for Dai Xianglong); Marcel Doupamby Matoka; Sergei Dubinin; Roque B. Fernández; José Angel Gurria; Marianne Jelved; Abdelouahab Keramane; Sultan Bin Nasser Al-Suwaidi (Alternate for Mohammed K. Khirbash); Pedro Sampaio Malan; Paul Martin; Wolfgang Ruttenstorfer (Alternate for Philippe Maystadt); Shozaburo Nakamura; Robert E. Rubin; Yashwant Sinha; Dominique Strauss-Kahn; Kaspar Villiger; Theo Waigel; A.H.E.M. Wellink (Alternate for Gerrit Zalm). - Observers listed included representatives from UNCTAD, Joint Development Committee, BIS, CEC, OECD, UN/DESA, WTO, and the World Bank (e.g., Yilmar Akyuz; Anwar Ibrahim; Andrew D. Crockett; Yves-Thibault de Silguy; Donald J. Johnston; Ian Kinniburgh; Renato Ruggiero; James D. Wolfensohn). *Source: APPENDIX VI, ANNUAL REPORT 1998.* ### APPENDIX VI ### APPENDIX VI ### Fifty-Sixth Meeting, Hong Kong, China, September 22, 1997 - Chair: Mr. Driss Jettou, Minister of Finance, Commerce, Industry and Handicrafts of Morocco. - Helping Countries Combat Corruption and Improve Governance - Corruption and weak governance undermine macroeconomic stability, private sector activity and sustainable development objectives, and may erode international support for development cooperation. - Corruption is a global problem requiring complementary actions by all countries; member governments have primary responsibility. - Welcomed more active involvement of the Bank and the Fund, each within their respective mandate, including introduction of greater transparency in the public sector. - Welcomed relevant strategies and guidelines recently issued by the Bank and the Fund. - Stressed consistent and evenhanded approach; governance and corruption should be explicitly taken into account in lending and other decision making when they significantly affect project or macroeconomic and country performance. - Requested that the Bank and Fund report to the Committee in a year’s time on implementation of their respective strategies and guidelines. - Multilateral Development Banks (MDBs) and Procurement - Invited other MDBs to develop similar strategies and guidelines. - Encouraged MDBs, as a matter of urgency, to establish procurement procedures and oversight mechanisms of the highest standard and as uniform as possible, including antibribery provisions. - Noted borrowers’ ultimate responsibility for fair and effective procurement and stressed importance of MDB assistance to build borrower capacity and accountability. - International Coordination - Welcomed efforts under way in other international and regional bodies to coordinate efforts to combat corruption. - Encouraged governments to criminalize international bribery in an effective and coordinated way. - Multilateral Investment Guarantee Agency (MIGA) - Reiterated support for MIGA’s continued growth in response to expanding demand for its services. - Welcomed consensus on a three-part funding package to address MIGA’s resource constraints comprising: - an IBRD grant of $150 million, - paid-in capital of $150 million, - plus $700 million of callable capital. - Urged IBRD management and Board of Executive Directors to move swiftly to implement the $150 million grant. - Urged MIGA’s Board to reach agreement on implementation of the remainder of the package and to reach clear understandings on core policy issues as soon as possible. - Requested closure on the capital increase by the Committee’s next meeting in April 1998. - Private Involvement in Infrastructure - Welcomed the World Bank Group Action Program to strengthen the Group’s ability to increase private participation in infrastructure within objectives to support poverty reduction and sustainable development. - Recognized governments’ continuing significant role in infrastructure investment, and emphasized increasing opportunities for private sector involvement. - Encouraged the Bank Group to strengthen its catalytic role through early and effective implementation of the Action Program’s assistance in finance, advisory services, risk mitigation, and knowledge and information. - Stressed importance of coordination among the Bank Group based on agreed country frameworks and strategies. - Implementation of the Debt Initiative for Heavily Indebted Poor Countries (HIPC) - Welcomed further progress in implementing the Initiative to support governments showing strong commitment to reform. - Encouraged eligible countries to undertake policy actions necessary to secure debt relief. - Decisions to provide assistance of about $0.9 billion (in present value terms), which will generate debt-service reduction of about $1.5 billion, have been made for Bolivia, Burkina Faso, and Uganda; decisions on Côte d’Ivoire, Guyana, and Mozambique are expected in the near future. - Stressed importance of adequate interim financing by all creditors and appreciated close collaboration among creditors, including understandings on burden sharing. - Noted bilateral contributions of about $100 million had already been made or pledged to the HIPC Trust Fund (administered by the World Bank), and urged other governments to contribute. - Encouraged international financial institutions that have not yet finalized mechanisms for participation to do so as soon as possible. - Noted need for additional resources to help finance the African Development Bank’s full participation in the Initiative and additional resources to finance the Fund’s contribution to the HIPC Initiative for countries beyond those noted and, more generally, the need to complete the funding of ESAF. - Strategic Compact - Welcomed progress made in beginning to meet the Compact’s ambitious objectives to strengthen the Bank’s effectiveness, as reflected in Management’s first semiannual progress report to the Executive Directors. - Bank-Fund Collaboration on Strengthening Financial Sectors - Noted importance for macroeconomic stability and growth of strengthening financial systems of developing countries; welcomed increased emphasis on this area in Bank and Fund operations. - Viewed enhanced cooperation between the Bank and the Fund as an urgent priority and welcomed recent agreement guiding increased collaboration to help member countries strengthen their financial systems. - Note of Appreciation - Expressed deep appreciation for the hospitality provided by the Chinese authorities and the Hong Kong Monetary Authority. - Next Meeting - The Committee’s next meeting will be held on April 17, 1998 in Washington, D.C. ### Fifty-Seventh Meeting, Washington, D.C., April 17, 1998 - Chair: Dato’ Seri Anwar Ibrahim, Deputy Prime Minister and Minister of Finance of Malaysia. - Implications of the Asian Financial Crisis - Reviewed implications of the Asian financial crisis for the World Bank Group in the context of a globalized economy. - Recognized the crisis risks damaging the region’s development achievements, particularly antipoverty performance. - Expressed strong support for the active role of the Bank Group and the International Monetary Fund, together with the Asian Development Bank, in restoring confidence and sustainable growth and helping ensure stability in the international financial system. - Appreciated rapid and substantial response, including significant financial assistance to underpin stabilization measures, programs of structural reform and technical assistance in key sectors in the most affected countries. - Noted that while the region has vast potential for sustained high levels of economic growth, significant external support would still be required for a number of these countries over the foreseeable future. - Welcomed Bank and IMF efforts to help governments address social consequences of crises, including shielding targeted public expenditures, improving labor standards, and strengthening social safety nets for the most vulnerable. - Supported Bank actions to help governments protect the poor, enhance quality of social services, improve design and financing of social funds, and promote sustainable environmental management. - Welcomed active support for design and implementation of financial and corporate restructuring and governance, and enhanced country capacity for better economic management and financial resiliency. - Urged the Bank, in implementing the Strategic Compact and maintaining support for all members, to strengthen ability to address rapidly such situations and help governments avoid such crises in the future by assisting in strengthening key institutions and structural policies and augmenting skills and capacities in related areas, including the financial sector, corporate restructuring and governance, and poverty reduction and social sustainability. - Urged Bank and Fund to review and reinforce their partnership based on respective mandates. - Implementation of the Debt Initiative for Heavily Indebted Poor Countries (HIPC) - Pleased by increasing momentum in implementation of the HIPC Initiative. - Congratulated Uganda on becoming the first country to reach its completion point under the HIPC Initiative, resulting in savings in nominal debt service of about $650 million (about $350 million in NPV terms). - Welcomed Executive Board decisions to add Guyana, Côte d’Ivoire, and Mozambique to the group for which debt-reduction packages have been agreed. - Noted Mozambique involved exceptional commitments by Paris Club members, in particular Russia, and contributions from other countries and extraordinary assistance by IDA and the Fund. - The six countries that have qualified for assistance under the Initiative would be eligible to receive estimated debt relief amounting to about $5.7 billion (the equivalent of $3 billion in NPV terms). - Noted Mali and Guinea-Bissau are expected to join this group shortly and encouraged potentially eligible countries to undertake Bank/Fund-supported programs in a timely manner so that by the year 2000 as many as possible could be included. - Welcomed increasing bilateral contributions to the HIPC Trust Fund and stressed importance of additional contributions, including from the African Development Bank. - Multilateral Investment Guarantee Agency (MIGA) - Welcomed successful conclusion of MIGA Board deliberations on MIGA’s $850 million general capital increase (including a $150 million paid-in portion), and agreement by IBRD governors to transfer $150 million as a grant to MIGA. - Noted these measures will relieve MIGA’s short-term financial constraints and provide a sustainable capital structure for the medium to long term, enabling response to growth in demand for its services. - Welcomed progress achieved by the MIGA Board on core policy issues and urged continued discussions to reach clear understandings on remaining issues as soon as possible. - Report of the Multilateral Development Banks (MDBs) - Expressed appreciation to Presidents of the four regional development banks and the World Bank for a comprehensive report on MDB follow-up to recommendations of the Committee’s MDB Task Force. - Welcomed progress by the MDBs in implementing programs to strengthen institutional effectiveness. - Welcomed efforts to strengthen collaboration in program evaluation and procurement rules and commitment to expand cooperation in governance, corruption, capacity building, financial sector fundamentals and reform, and infrastructure financing. - Suggested establishing practical objectives for the next few years in areas such as evaluation and urged MDBs to work closely with member governments to ensure more effective in-country coordination based on a shared strategic view and enhanced development impact. - Requested the World Bank President inform the Committee at the spring 1999 meeting of progress in strengthening World Bank cooperation with the regional development banks. - Agreed the Committee should continue to develop practice of addressing broad systemic issues with contributions from other MDBs where appropriate. - World Bank Net Income Dynamics - Considered issues raised by a decline in IBRD net income while potential demands on this income were increasing. - Urged the Bank’s Board of Directors to review, on an urgent basis, all available options and make appropriate recommendations and decisions in the next three months. - Next Meeting - The Committee’s next meeting will be held on October 5, 1998 in Washington, D.C. *Source: APPENDIX VI, _file09pdf - APPENDIX VI* --- _Source: https://www.imf.org/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/ar/98/pdf/_file09pdf.pdf_