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### Selected Economies: Current Account Positions (Percent of GDP)
- Table 3 current account balances for 1995–1997 (selected figures):
  - United States: 1995 –1.8; 1996 –1.9; 1997 –2.1
  - Japan: 1995 2.2; 1996 1.4; 1997 2.2
  - Germany: 1995 –1.0; 1996 –0.6; 1997 –0.3
  - France: 1995 0.7; 1996 1.3; 1997 2.7
  - Italy: 1995 2.3; 1996 3.2; 1997 2.9
  - United Kingdom: 1995 –0.5; 1996 –0.1; 1997 0.3
  - Korea: 1995 –2.0; 1996 –4.9; 1997 –2.0
  - Singapore: 1995 16.8; 1996 15.7; 1997 15.2
  - Thailand: 1995 –8.0; 1996 –7.9; 1997 –2.0
  - China: 1995 0.2; 1996 0.9; 1997 2.4
  - Russia: 1995 1.3; 1996 0.5; 1997 –0.3
- Memorandum: European Union: 1995 0.6; 1996 1.1; 1997 1.4
- Notes: Hong Kong SAR figures include only goods and nonfactor services; Poland figures are IMF staff estimates including unrecorded trade transactions.

### Chronological Highlights (1997–1998) — Crisis Responses and Program Milestones
- Thailand (selected milestones):
  - August 11, 1997: IMF convenes meeting in Tokyo; total support pledged for Thailand eventually reaches about $17.2 billion.
  - August 20, 1997: Board approves an SDR 2.9 billion Stand-By Arrangement for Thailand and releases SDR 1.2 billion.
  - October 17, 1997: Board reviews the Stand-By Arrangement under Emergency Financing Mechanism procedures.
  - December 8, 1997: Board completes first review and disburses SDR 600 million.
  - February 24, 1998: Thailand issues a Letter of Intent describing further measures.
  - March 4, 1998: Board completes second review and disburses SDR 200 million.
  - June 10, 1998: Board completes third review, approves SDR 100 million disbursement and concludes the 1998/99 Article IV consultation.
- Indonesia (selected milestones):
  - November 5, 1997: Executive Board approved financial support of up to SDR 7.3 billion (490 percent of quota) over three years.
  - Mid-January 1998: IMF management visits Jakarta to consult with President Suharto on acceleration of reforms.
  - January 15, 1998: Indonesia issues Memorandum of Economic and Financial Policies with additional measures.
  - May 4, 1998: Board completes first review under the Stand-By Arrangement and disburses SDR 734 million.
  - July 15, 1998: Board completes second review, disburses SDR 734 million, approves increase in IMF financing under the Stand-By Arrangement by SDR 1 billion; IMF announces additional multilateral and bilateral financing for total additional financing of more than $6 billion (including IMF increase).
- Korea (selected milestones):
  - December 4, 1997: Executive Board approved financing of up to SDR 15.5 billion (1,939 percent of Korea’s quota) over three years.
  - Subsequent Letters of Intent: December 24, 1997; January 7, 1998; February 7, 1998; May 2, 1998 — programs revised and intensified as crisis evolved.

### Indonesia: Program Design, Fiscal Targets, and Reinforcements
- Initial program objectives and key measures:
  - Stabilize the rupiah by retaining a tight monetary policy.
  - Financial sector restructuring: close unviable institutions; merge state banks; timetable for addressing remaining weak institutions; improve institutional, legal, and regulatory framework.
  - Structural reforms: liberalize foreign trade and investment; dismantle domestic monopolies; expand privatization.
  - Fiscal measures equivalent to about 1 percent of GDP in 1997/98 and 2 percent in 1998/99 to yield a public sector surplus of 1 percent of GDP in both years.
  - Fiscal actions included cutting low-priority expenditures; postponing/rescheduling major state enterprise infrastructure projects; reducing government subsidies; eliminating VAT exemptions; adjusting administered prices (electricity and petroleum).
- Reinforcing measures (January 15, 1998):
  - Cancel 12 infrastructure projects; revoke/discontinue financial privileges for IPTN airplane projects and the National Car project.
  - Strengthen bank and corporate sector restructuring; establish framework for voluntary, case-by-case handling of corporate external debt.
  - Continued supplementary memoranda, reviews, and multiple SDR disbursements through mid-1998.

### Korea: Stabilization Measures, Structural Reform, and Program Adjustments
- Core initial program elements:
  - Comprehensive financial sector restructuring: explicit exit policy for weak institutions; stronger market and supervisory discipline; greater central bank independence. Actions included suspending operations of nine insolvent merchant banks and capital injections into two large distressed commercial banks.
  - Fiscal measures expected to yield savings equivalent to about 2 percent of GDP to cover restructuring costs while maintaining prudence; broaden corporate, income, and VAT bases.
  - Dismantling nontransparent government–bank–business ties: upgrade accounting, auditing, disclosure standards; require consolidated financial statements certified by external auditors; phase out cross guarantees within conglomerates.
  - Trade liberalization: timetable to eliminate trade-related subsidies; import diversification program; improve transparency of import certification.
  - Capital account liberalization: open Korean money, bond, and equity markets to capital inflows; liberalize foreign direct investment.
  - Labor market reform to facilitate redeployment of labor.
  - Publication and dissemination of key economic and financial data.
- Intensified measures as crisis worsened:
  - Monetary tightening and abolition of the daily exchange rate band.
  - Speed up liberalization of capital and money markets; lift capital account restrictions on foreign investors’ access to the bond market by December 31, 1997.
  - Accelerate comprehensive financial sector restructuring and establish negotiation framework with foreign creditors.
- Program updates (May 2, 1998 Letter of Intent):
  - Restructure $22 billion of banks’ short-term foreign debt.
  - Sovereign global bond issue of $4 billion.
  - Current account shifted into substantial surplus; usable reserves increased to more than $30 billion.
  - Permit a larger fiscal deficit of about 2 percent of GDP in 1998.
  - Strengthen and expand social safety net: widen unemployment insurance coverage; increase minimum benefit duration and levels; temporarily lower minimum contribution periods.

### Selected Economic Indicators (as of July 23, 1998) — Thailand, Indonesia, Korea (selected series)
- Thailand:
  - Real GDP growth: 1995 8.8; 1996 5.5; 1997 –0.4; 1998 –4.0 to –5.5
  - Consumer prices (end of period): 1995 7.4; 1996 4.8; 1997 7.7; 1998 10.0
  - Central government balance (percent of GDP): 1995 3.0; 1996 2.4; 1997 –0.9; 1998 –2.4
  - Current account balance (percent of GDP): 1995 –7.8; 1996 –7.9; 1997 –2.0; 1998 6.9
  - External debt (billions of U.S. dollars): 1995 82.6; 1996 90.5; 1997 91.8; 1998 89.7
  - Short-term debt (billions): 1995 41.1; 1996 37.6; 1997 29.9; 1998 22.8
  - External debt (percent of GDP): 1995 49.1; 1996 49.9; 1997 59.6; 1998 72.5
- Indonesia:
  - Real GDP growth: 1995 8.2; 1996 8.0; 1997 4.6; 1998 –13 to –14
  - Consumer prices (end of period): 1995 9.0; 1996 6.6; 1997 11.6; 1998 80.6
  - Central government balance (percent of GDP): 1995 0.9; 1996 1.2; 1997 –0.9; 1998 –8.5
  - Current account balance (percent of GDP): 1995 –3.2; 1996 –3.3; 1997 –1.8; 1998 1.6
  - External debt (billions of U.S. dollars): 1995 107.8; 1996 110.2; 1997 136.1; 1998 135.0
  - Short-term debt (billions): 1995 9.5; 1996 13.4; 1997 18.8
  - External debt (percent of GDP): 1995 53.3; 1996 48.5; 1997 64.5; 1998 162.7
- Korea:
  - Real GDP growth: 1995 8.9; 1996 7.1; 1997 5.5; 1998 –1 to –2
  - Consumer prices (end of period): 1995 4.7; 1996 4.9; 1997 6.6; 1998 8.2
  - Central government balance (percent of GDP): 1995 0.3; 1996 0.3; 1997 0.0; 1998 –1.7
  - Current account balance (percent of GDP): 1995 –1.9; 1996 –4.7; 1997 –1.9; 1998 7.3
  - External debt (billions of U.S. dollars): 1995 119.7; 1996 157.5; 1997 154.4; 1998 163.3
  - Short-term debt (billions): 1995 78.7; 1996 100.0; 1997 68.4; 1998 39.6
  - External debt (percent of GDP): 1995 26.4; 1996 32.5; 1997 34.9; 1998 51.5

### Surveillance and Financial-Sector Lessons (post-crisis diagnostics and priorities)
- Key lessons and Director views:
  - Financial-sector problems often complex and long in gestation; IMF needs more expertise and staff resources in financial sector analysis.
  - Some Directors argued IMF’s comparative advantage lies in macroeconomic analysis and that the World Bank/other institutions should lead restructuring; others argued IMF’s intensive role in financial sector reforms during the Asian crisis was essential.
- Agreed priorities:
  - Close collaboration with World Bank, national supervisory authorities, and BIS to avoid duplication.
  - Development and promotion of international standards (e.g., Basle Committee Core Principles on Banking Supervision) to aid surveillance and inform markets.
- Capital account issues and surveillance emphasis:
  - Monitor sequencing and pace of capital account liberalization; risks from reversal of large capital flows; rapid accumulation of short-term external debt; impacts of selective liberalization.
  - Accurate and timely data are critically important.
  - Mixed views on capital controls: some support systematic reporting on liberalization progress; a few see a role for selective, well-targeted controls; most skeptical about controls in already relatively open economies except for temporary breathing space.
- Policy interdependence and contagion (Lesson Three):
  - Country-level surveillance should pay greater attention to how policies in systemically/regionally important countries affect others.
  - Bilateral consultations should examine vulnerability to external developments to urge early, forceful action.
  - Multilateral surveillance should be integrated with bilateral dialogue and use staff expertise in capital markets and financial sector issues.
  - Many Directors supported more frequent, systematic exchange between staff and market participants; staff reports should include summary assessments of surveillance and IMF financial assistance where relevant.

### Technical Assistance and Training: Scale, Distribution, and Trends
- Role and objectives:
  - Technical assistance and training support governments’ policy and institutional reform; serve preventive role by strengthening economic management capacity.
  - Much IMF technical assistance in 1997/98 remained remedial—addressing immediate problems or program implementation needs.
- Resource share and volume:
  - Technical assistance activity represented about 17 percent of total IMF administrative expenditures in 1997/98.
  - Recent annual volume ≈ 300 person-years.
  - Cost per unit increased due to higher compensation for outside experts and greater use of short-term experts.
- Regional shift and postconflict focus:
  - In 1995, two IMF European Departments absorbed 40 percent of technical assistance resources; this dropped to 30 percent in 1997/98.
  - Share for Africa and Middle Eastern Departments combined rose to 37 percent from 28 percent over same period.
  - IMF technical assistance increasingly involved postconflict countries; request-and-response approach considered inadequate for urgent rehabilitation.
- Key technical assistance delivery statistics (effective person-years):
  - Fund technical assistance resources: 220.0 (1994/95); 211.4 (1995/96); 172.7 (1996/97); 189.6 (1997/98)
  - Staff: 115.7; 108.6; 97.1; 103.9
  - Headquarters-based consultants: 22.1; 23.5; 20.1; 20.8
  - Experts: 82.3; 79.3; 55.5; 64.9
  - External technical assistance resources: 80.5; 97.5; 104.2; 96.2
  - United Nations Development Programme: 16.6; 25.0; 21.5; 24.4
  - Japan: 51.4; 50.6; 67.3; 55.6
  - Other: 12.4; 7.5; 15.4; 16.2
  - Total technical assistance resources: 300.6; 309.0; 277.0; 285.7
  - Total resources by department (1997/98): Monetary and Exchange Affairs Department 110.6; Fiscal Affairs Department 98.8; Statistics Department 39.0; IMF Institute 12.1; Legal Department 10.3; Other 14.9
  - Total regional use by department (1997/98): African Department 65.8; Asia and Pacific Department 42.5; European I Department 23.8; European II Department 52.6; Middle Eastern Department 29.5; Western Hemisphere Department 35.2; Interregional 8.6; Nonregional use 26.9
  - Note: An effective person-year of technical assistance is 260 days. Data for 1996/97 and 1997/98 include departmental reorganizations.

### Members’ Use of IMF Resources and Credit Outstanding (1997/98)
- Purchases from the GRA (excluding reserve tranche purchases) in 1997/98: SDR 19.0 billion (nearly four times 1996/97 level of SDR 4.9 billion).
  - Composed of SDR 16.1 billion under Stand-By Arrangements (compared with SDR 1.8 billion in 1996/97) and SDR 2.8 billion under Extended Arrangements (SDR 2.8 billion in 1996/97).
  - Purchases under policy on emergency postconflict assistance: SDR 30 million in 1997/98.
  - No purchases under the Compensatory and Contingency Financing Facility (CCFF) in 1997/98 (SDR 0.3 billion in 1996/97).
- Largest users of IMF resources in 1997/98:
  - Korea: SDR 11.2 billion (including SDR 7.1 billion under the SRF)
  - Indonesia: SDR 2.2 billion
  - Thailand: SDR 2.0 billion
  - Russia: SDR 1.5 billion
  - Philippines: SDR 0.8 billion
  - Algeria: SDR 0.3 billion
  - Argentina: SDR 0.2 billion
  - Bulgaria: SDR 0.2 billion
  - Ukraine: SDR 0.2 billion
- By region (1997/98 purchases):
  - Asia: SDR 16.2 billion
  - Europe (including Baltic States, Russia, and other former Soviet Union): SDR 2.0 billion
  - Latin American, Middle Eastern, and African countries combined: SDR 0.7 billion
- Repurchases in the GRA during 1997/98: SDR 3.8 billion (compared with SDR 6.7 billion in 1996/97).
  - Largest repurchases by country in 1997/98: Argentina (SDR 0.5 billion); India, Mexico, and Russia (roughly SDR 0.4 billion each); Algeria, South Africa, and Venezuela (roughly SDR 0.3 billion each).
- Net change and outstanding credit:
  - IMF credit outstanding in the GRA increased by SDR 15.2 billion in 1997/98, to SDR 49.7 billion as of April 30, 1998 from SDR 34.5 billion a year earlier.
  - IMF credit outstanding under all facilities increased by SDR 15.5 billion in 1997/98, to SDR 56.0 billion on April 30, 1998 from SDR 40.5 billion a year earlier.

### Stand-By, Extended Arrangements, and Special Facilities (1997/98)
- Stand-By Arrangements:
  - Nine new Stand-By Arrangements approved totaling SDR 27.3 billion.
  - Stand-By Arrangements totaling SDR 26.7 billion approved for Indonesia (SDR 7.3 billion), Korea (SDR 15.5 billion), the Philippines (SDR 1.0 billion), and Thailand (SDR 2.9 billion).
  - Korea arrangement included SDR 10.0 billion available until December 1998 under the SRF.
  - Additional Stand-By Arrangements totaling SDR 0.6 billion approved for Cape Verde, Estonia, Latvia, Ukraine, and Uruguay.
  - As of April 30, 1998, 14 countries had Stand-By Arrangements with total commitments of SDR 28.3 billion and undrawn balances of SDR 12.4 billion.
- Extended Arrangements:
  - Four new Extended Arrangements approved with commitments totaling SDR 2.8 billion (Argentina, Pakistan, Panama, Yemen); Argentina’s arrangement SDR 2.1 billion.
  - Extended Arrangement for the Philippines augmented by SDR 0.3 billion.
  - As of April 30, 1998, 13 countries had Extended Arrangements, with commitments totaling SDR 12.3 billion and undrawn balances of SDR 6.8 billion.
- Special facilities and purchases:
  - No member used the CCFF in 1997/98; Buffer Stock Financing Facility inactive since 1983.
  - Three countries (Albania, Rwanda, Tajikistan) made purchases totaling SDR 30 million under emergency postconflict assistance in 1997/98.
- Overall new commitments under Stand-By and Extended Arrangements in 1997/98: SDR 30.4 billion (including the Philippines augmentation); nearly 90 percent approved for Asian countries affected by the regional financial crisis.

### SAF/ESAF and Concessional Financing (1997/98)
- ESAF activity:
  - Eight new ESAF Arrangements approved in 1997/98 for Cameroon, Côte d’Ivoire, Mongolia, Nicaragua, Pakistan, Senegal, Uganda, and Yemen with commitments totaling SDR 1.7 billion.
  - As of April 30, 1998, 33 ESAF Arrangements were in effect.
  - Cumulative commitments under all approved SAF and ESAF Arrangements (excluding undisbursed amounts under expired and canceled arrangements) totaled SDR 10.3 billion as of April 30, 1998, compared with SDR 8.8 billion a year earlier.
  - Total ESAF disbursements in 1997/98: SDR 1.0 billion (SDR 0.7 billion in 1996/97); cumulative SAF and ESAF disbursements through April 30, 1998: SDR 8.1 billion.
  - As of April 30, 1998, total disbursements of SDA resources under SAF and ESAF Arrangements amounted to SDR 2.2 billion.
  - Note: The SAF has been phased out; the last annual SAF Arrangement expired in December 1996.

### Selected Financial Indicators (Table excerpts; Millions of SDRs)
- Total disbursements (financial year ended April 30):
  - 1990: 5,266
  - 1996: 11,178
  - 1996/97: 5,644
  - 1997/98: 19,924
- Purchases by facility (GRA) during period (selected):
  - Stand-By and first credit tranche in 1997/98: 16,127
  - Extended Fund Facility 1997/98: 2,824
  - Loans under SAF/ESAF arrangements in 1997/98: 973
- Repurchases and repayments (end of period 1997/98): 4,385 (repurchases 3,789; trust fund and SAF/ESAF repayments 596)
- End of period total outstanding credit provided by IMF:
  - 1996/97: 40,488
  - 1997/98: 56,026
  - Of which General Resources Account: 49,701 (as of April 30, 1998)
  - ESAF Trust (end of period 1997/98): 5,314

### Precautionary Balances, Income, and Charges (1997/98 and 1998/99 decisions)
- Rates and adjustments:
  - Unpaid charges and adjustments led to changes of 18 basis points to the basic rate of charge and 21 basis points to the rate of remuneration during 1997/98.
  - Adjusted rate of charge averaged 4.59 percent and adjusted rate of remuneration averaged 3.97 percent during the financial year.
- Net income and reserves:
  - Retroactive reductions of charges totaling SDR 53 million.
  - Net income of SDR 164 million for 1997/98 placed to IMF’s reserves, of which SDR 65 million was placed to the General Reserve.
  - Total reserves increased to SDR 2.1 billion as of April 30, 1998, from SDR 2.0 billion a year earlier.
- Board decision for 1998/99:
  - Proportion of the rate of charge to the SDR interest rate set at 107 percent to achieve a target net income of SDR 107 million (in addition to SRF income). An equal amount is to be added to the SCA-1.
  - Net operational income from the SRF for 1998/99, after ESAF Trust administration expenses, will be placed to the General Reserve at fiscal year end.
- Precautionary balances and coverage:
  - Precautionary balances generally available (reserves plus SCA-1) totaled SDR 3.0 billion as of April 30, 1998, equivalent to 293 percent of outstanding GRA credit to members in arrears by six months or more (SDR 1.0 billion).
  - Total precautionary balances (reserves and balances in the two SCAs) amounted to SDR 4.0 billion, equivalent to 8.1 percent of total outstanding GRA credit as of April 30, 1998.
  - Directors agreed to accelerate accumulation of precautionary balances in light of expansion of outstanding IMF credit during 1997/98.

### Overdue Financial Obligations and Strengthened Cooperative Strategy
- Overdue obligations summary:
  - Outstanding overdue financial obligations increased slightly to SDR 2.3 billion on April 30, 1998, from SDR 2.2 billion a year earlier.
  - Number of countries in arrears by six months or more remained at seven in 1997/98.
- Composition of arrears (Table 14, as of April 30, 1998; Millions of SDRs):
  - Afghanistan, Islamic State of: Total 2.5 (General Department 2.5)
  - Congo, Democratic Republic of the: Total 334.0 (General Department 328.6; SDR Department 5.4)
  - Iraq: Total 33.0 (General Department 33.0)
  - Liberia: Total 454.6 (General Department 407.4; SDR Department 16.4; Trust 30.8)
  - Somalia: Total 194.3 (General Department 180.4; SDR Department 6.2; Trust 7.7)
  - Sudan: Total 1,156.2 (General Department 1,079.0; SDR Department 0.1; Fund 77.1)
  - Yugoslavia, Federal Republic of (Serbia/Montenegro): Total 86.6 (General Department 71.1; SDR Department 15.5)
  - Total overdue obligations: 2,261.2 (General Department 2,066.5; SDR Department 79.1; Trust 115.6)
- Ineligibility and remedial actions:
  - Four countries ineligible to use general resources as of April 30, 1998: Democratic Republic of the Congo; Liberia; Somalia; Sudan. These four accounted for 95 percent of total overdue obligations.
  - Declarations of noncooperation in effect for Democratic Republic of the Congo, Liberia, Sudan; voting rights suspended for Democratic Republic of the Congo and Sudan.
- Strengthened cooperative strategy elements (since May 1990):
  - Prevention: strong macroeconomic adjustment programs supported by IMF arrangements; technical assistance; assurance of adequate financing; medium-term BOP viability assessments.
  - Intensified collaboration: framework for cooperating members in arrears to establish policy track records and payments to mobilize support and clear arrears; use of rights approach.
  - Remedial measures: continued implementation to resolve protracted arrears; example of Sudan’s 1997 staff-monitored program and proposed 1998 payment schedule as part of conditionality.

### SDR Department, Amendment Proposal, and Special Allocation Mechanics
- SDR context:
  - SDR created under the First Amendment; first allocated January 1970; total SDR allocations amount to SDR 21.4 billion.
  - SDRs are held largely by IMF member countries; 15 prescribed holders as of 1997/98 may also hold SDRs but do not receive allocations.
  - At end of 1997/98, currencies of four member countries were pegged to the SDR.
- Fourth Amendment proposal (September 1997 Board of Governors resolution):
  - Proposal would authorize a special one-time allocation of SDR 21.4 billion to raise participants’ ratios of cumulative SDR allocations to quota under the Ninth General Review of Quotas to a common benchmark ratio of 29.315788813 percent.
  - Amendment becomes effective when approved by three-fifths of the members having 85 percent of total voting power.
  - Provides for future participants to receive a special allocation following the later of (1) their participation date or (2) the Fourth Amendment effective date.
  - Would not affect IMF’s existing power to allocate SDRs based on a finding of long-term global need to supplement reserves.
- Appendix II, Table II.11 shows the amount of SDRs each participant will be eligible to receive under the special allocation.

### SDR Valuation, Interest Rate Basket, and Transactions (1997/98 highlights)
- SDR valuation and basket (effective January 1, 1996):
  - Criteria: currencies of five member countries with largest exports of goods and services during the five-year period ended one year prior to revision date.
  - Weights and amounts (As of January 1, 1996):
    - U.S. dollar: Percentage Weight 39; Amount of Currency Units 0.582
    - Deutsche mark: Percentage Weight 21; Amount of Currency Units 0.446
    - Japanese yen: Percentage Weight 18; Amount of Currency Units 27.2
    - French franc: Percentage Weight 11; Amount of Currency Units 0.813
    - Pound sterling: Percentage Weight 11; Amount of Currency Units 0.105
  - Since August 1, 1983, SDR interest rate calculated weekly as weighted average of short-term instrument rates in basket countries.
  - With effect from January 1, 1991, instruments used:
    - Market yield on three-month treasury bills in the United States and the United Kingdom.
    - Three-month interbank deposit rate in Germany.
    - Three-month rate on certificates of deposit in Japan.
    - Three-month rate for treasury bills in France.
- SDR transactions and operations (1997/98):
  - Total transfers of SDRs in 1997/98: SDR 20.3 billion (from SDR 19.8 billion in 1996/97).
  - Increase in transfers among participants and prescribed holders: SDR 1.5 billion (offset a decline in transfers involving the GRA).
  - Selected Table 16 flows (financial year ended April 30, 1998):
    - Transfers among participants and prescribed holders (from own holdings): 5,016
    - Transfers among participants and prescribed holders (from purchase of SDRs from IMF): 14,727
    - Total transfers from participants to GRA (financial year ended April 30, 1998): Repurchases 36,756; Charges 36,386; Quota payments 25,097; Interest received on GRA holdings 4,102
    - Total transfers from GRA to participants and prescribed holders: Purchases 56,629; Repayments of IMF borrowings 11,620; Interest on IMF borrowings 4,286; Remuneration 19,333
    - General Resources Account holdings at end of period (selected): 1,371; 5,445; 4,335; 1,960; 1,001; 825; 1,494; 764; 764
  - Note: Table 16 reports detailed flows among prescribed operations, IMF-related operations, net interest on SDRs, and GRA interactions.

### Organization, Staffing, Recruitment, Diversity, and Budgets (1997/98)
- Organization and staffing (as of December 31, 1997):
  - Assistant staff: 693
  - Professional and managerial staff: 1,488 (approximately two-thirds economists)
  - Other authorized staff positions: some 480 (experts, consultants, Economist Program participants, and other nonregular resources)
  - Member country representation on staff: 122 of the IMF’s 182 member countries
- Staff-years:
  - Staff-years used in 1997/98: 2,941 (compared with 2,904 in 1996/97)
  - Regular staff-years: 1,988 (1,999 in 1996/97)
  - Total supplemented by other resources for 2,585 staff-years (2,545 in 1996/97)
  - Office of Executive Directors: 230 staff-years (232 in 1996/97)
  - Externally financed technical assistance experts and related overhead: 125 staff-years (127 in 1996/97)
- Recruitment and separations (1997):
  - 149 new staff joined (84 economists; 26 professionals in specialized career streams; 39 assistants)
  - 49 mid-career economists hired (up from 30 in 1996); 31 entered the Economist Program
  - 137 staff separated (increase of 22 over 1996); separation rate of professional staff rose to 7 percent (104 staff) in 1997 from 5!/2 percent (82 staff) in 1996
  - Turnover increase largely due to resignations of economists joining private sector financial firms
- Salary policy:
  - IMF salary structure reviewed annually against selected private financial and industrial firms and public sector organizations in the United States, France, and Germany
  - Salary structure increased by 4.3 percent in 1997/98; Board approved 4.3 percent increase for 1998/99
- Diversity initiatives and progress:
  - Special Advisor on Diversity designed initiatives to enhance nationality and gender diversity.
  - Departments implemented diversity action plans in 1997/98: mentoring; career development recognition; flexible work arrangements; emphasis on diversity in recruitment; grade and salary equity initiatives.
  - Expanded monitoring showed some progress; full satisfactory diversity will take time.
- Gender and regional staff distribution (selected 1997 figures):
  - Nationality distribution (professional and managerial staff, percent): Africa 5.2; Asia 15.0; Japan 1.6; Other Asia 13.4; Europe 33.2; France 4.5; Germany 3.8; Italy 2.8; United Kingdom 7.0; Other Europe 14.0; Middle East 6.1; Western Hemisphere 40.5; Canada 3.5; United States 25.5; Other Western Hemisphere 11.5; Total 100.0
  - Gender distribution (selected totals): Total staff 2,181 — Women 1,014 (46.5 percent); Men 1,167 (53.5 percent). Professional staff total 1,179 — Women 390 (33.1 percent); Men 789 (66.9 percent). Economists total 770 — Women 150 (19.5 percent); Men 620 (80.5 percent).
- Administrative and Capital Budgets (medium-term outlook and 1997/98 results):
  - Administrative Budget for financial year ended April 30, 1998 (1997/98) approved: $503.7 million.
  - Actual administrative expenditures during the year: $495.3 million.
  - Capital Budget: $27.2 million approved for projects beginning in financial year 1998 and $17.0 million approved for Part 3 of the Building Fit-Out Project (Phase III).
  - Capital project disbursements during 1997/98: $56.3 million, including $40.5 million for major building projects.
  - Administrative Budget resource use proportions (1997/98 estimated): Surveillance and use of IMF resources 66.1 percent; External relations 4.7 percent; Administrative support 18.2 percent; Board of Governors 4.0 percent; Executive Board 7.1 percent.
- Board-approved Administrative Budget for 1998/99 (April 1998): $519.5 million (3.1 percent increase over previous year).
  - Capital projects budget for 1998/99 approved: $14.4 million.
  - Estimated cost of major IMF activities (Millions of U.S. dollars):
    - Surveillance: 1997 $132.4 (28.1 percent); 1998 $141.1 (28.5 percent); 1999 $149.6 (28.8 percent)
    - Use of IMF resources: 1997 $116.7 (24.7 percent); 1998 $104.3 (21.1 percent); 1999 $126.3 (24.3 percent)
    - Technical assistance: 1997 $65.7 (13.9 percent); 1998 $81.6 (16.5 percent); 1999 $80.3 (15.5 percent)
    - Total: 1997 $471.6; 1998 $495.3; 1999 $519.5
- Administrative and Capital Budgets, Financial Years 1996–99 (selected figures, thousands of U.S. dollars):
  - Total Administrative Budget: 1996 $470,836; 1997 $471,564; 1998 actual expenses $495,279; 1999 budget $519,533
  - Net Administrative Budget expenses: 1996 $429,361; 1997 $421,862; 1998 $489,279; 1999 $513,733
  - Capital project budgets: 1996 $152,500; 1997 $20,123; 1998 $27,240; 1999 $14,440
  - Capital project disbursements: 1996 $34,800; 1997 $151,500; 1998 $56,061; 1999 $46,391
  - Salaries: 1996 $210,216; 1997 $216,350; 1998 $229,150; 1999 budget $247,270
  - Subtotal personnel: 1996 $341,331; 1997 $345,901; 1998 $346,363; 1999 $373,289
  - Other expenses subtotal: 1996 $162,743; 1997 $165,033; 1998 $184,752; 1999 $188,368
  - Reimbursements: 1996 –$33,239; 1997 –$39,368; 1998 –$35,836; 1999 –$42,124

*Content derived from the supplied IMF PDF chapter/section.*

### 2001. In March 1998, the drachma joined the

### _file12pdf - 2001. In March 1998, the drachma joined the

### Selected Economies: Current Account Positions (Percent of GDP)
- Table 3 highlights current account balances for 1995, 1996, 1997.
- Selected exact figures from the table:
  - United States: 1995 –1.8; 1996 –1.9; 1997 –2.1
  - Japan: 1995 2.2; 1996 1.4; 1997 2.2
  - Germany: 1995 –1.0; 1996 –0.6; 1997 –0.3
  - France: 1995 0.7; 1996 1.3; 1997 2.7
  - Italy: 1995 2.3; 1996 3.2; 1997 2.9
  - United Kingdom: 1995 –0.5; 1996 –0.1; 1997 0.3
  - Korea: 1995 –2.0; 1996 –4.9; 1997 –2.0
  - Singapore: 1995 16.8; 1996 15.7; 1997 15.2
  - Thailand (developing countries section): 1995 –8.0; 1996 –7.9; 1997 –2.0
  - China: 1995 0.2; 1996 0.9; 1997 2.4
  - Russia: 1995 1.3; 1996 0.5; 1997 –0.3
- Memorandum: European Union: 1995 0.6; 1996 1.1; 1997 1.4
- Notes: Table includes a footnote that Hong Kong SAR includes only goods and nonfactor services; Poland figures are based on IMF staff estimates including unrecorded trade transactions.

### Chronological Highlights (1997–1998)
- 1997 key operations related to Thailand:
  - August 11: IMF convenes meeting in Tokyo; total support pledged for Thailand eventually reaches about $17.2 billion.
  - August 20: Board approves an SDR 2.9 billion Stand-By Arrangement for Thailand and releases SDR 1.2 billion.
  - October 17: Board reviews the Stand-By Arrangement under Emergency Financing Mechanism procedures.
  - December 8: Board completes first review and disburses SDR 600 million.
- 1998 key Thailand milestones:
  - February 24: Thailand issues a Letter of Intent describing further measures.
  - March 4: Board completes second review and disburses SDR 200 million.
  - June 10: Board completes third review, approves SDR 100 million disbursement and concludes the 1998/99 Article IV consultation.
- Indonesia timeline highlights:
  - November 5, 1997: Executive Board approved financial support of up to SDR 7.3 billion (490 percent of quota) over three years.
  - Mid-January 1998: IMF management visits Jakarta to consult with President Suharto on acceleration of reforms.
  - January 15, 1998: Indonesia issues Memorandum of Economic and Financial Policies with additional measures.
  - May 4, 1998: Board completes first review under the Stand-By Arrangement and disburses SDR 734 million.
  - July 15, 1998: Board completes second review, disburses SDR 734 million, approves increase in IMF financing under the Stand-By Arrangement by SDR 1 billion; IMF announces additional multilateral and bilateral financing for total additional financing of more than $6 billion (including IMF increase).
- Korea timeline highlights:
  - December 4, 1997: Executive Board approved financing of up to SDR 15.5 billion (1,939 percent of Korea’s quota) over three years.
  - Subsequent Letters of Intent on December 24, 1997; January 7, 1998; February 7, 1998; May 2, 1998, revised and intensified program as crisis evolved.

### Indonesia: Program Design and Reinforcement
- Initial program objectives and measures:
  - Stabilizing the rupiah by retaining a tight monetary policy.
  - Financial sector restructuring: closing unviable institutions, merging state banks, timetable for dealing with remaining weak institutions, improving institutional, legal, and regulatory framework.
  - Structural reforms: liberalization of foreign trade and investment, dismantling domestic monopolies, expanding privatization.
  - Fiscal measures equivalent to about 1 percent of GDP in 1997/98 and 2 percent in 1998/99 to yield a public sector surplus of 1 percent of GDP in both years.
  - Fiscal measures included cutting low-priority expenditures, postponing/rescheduling major state enterprise infrastructure projects, reducing government subsidies, eliminating VAT exemptions, adjusting administered prices (electricity and petroleum products).
- Reinforcing measures announced January 15, 1998:
  - Canceling 12 infrastructure projects and revoking/discontinuing financial privileges for IPTN airplane projects and the National Car project.
  - Strengthening bank and corporate sector restructuring; establishing a framework for creditors and debtors to deal on a voluntary and case-by-case basis with corporate external debt problems.
  - Supplementary memoranda and reviews continued through mid-1998, with multiple SDR disbursements and additional external financing arrangements.

### Korea: Structural and Stabilization Measures
- Core elements of the initial program:
  - Comprehensive financial sector restructuring: clear exit policy for weak institutions, strong market and supervisory discipline, more independence for the central bank. Actions included suspending operations of nine insolvent merchant banks and capital injections into two large distressed commercial banks.
  - Fiscal measures expected to yield savings equivalent to about 2 percent of GDP to cover costs of financial sector restructuring while maintaining prudence; widening bases for corporate, income, and VAT.
  - Measures to dismantle nontransparent ties among government, banks, and businesses: upgrading accounting, auditing, and disclosure standards; consolidated financial statements certified by external auditors; phasing out cross guarantees within conglomerates.
  - Trade liberalization: timetable to eliminate trade-related subsidies and an import diversification program; improving transparency of import certification procedures.
  - Capital account liberalization: opening Korean money, bond, and equity markets to capital inflows; liberalizing foreign direct investment.
  - Labor market reform to facilitate redeployment of labor.
  - Publication and dissemination of key economic and financial data.
- Intensified measures as crisis worsened:
  - Monetary tightening and abolition of the daily exchange rate band.
  - Speeding up liberalization of capital and money markets, including lifting capital account restrictions on foreign investors’ access to the Korean bond market by December 31, 1997.
  - Accelerating comprehensive financial sector restructuring and establishing negotiation framework with foreign creditors.
- Program updates (May 2, 1998 Letter of Intent) cited:
  - Restructuring of $22 billion of banks’ short-term foreign debt.
  - Sovereign global bond issue of $4 billion.
  - Current account shifted into substantial surplus; usable reserves increased to more than $30 billion.
  - Accommodation of a larger fiscal deficit of about 2 percent of GDP in 1998.
  - Strengthening and expanding the social safety net: widening unemployment insurance coverage, increasing minimum benefit duration and levels, temporarily lowering minimum contribution periods.

### Selected Economic Indicators (as of July 23, 1998)
- Thailand (1995, 1996, 1997, 1998 May program where noted):
  - Real GDP growth: 1995 8.8; 1996 5.5; 1997 –0.4; 1998 –4.0 to –5.5
  - Consumer prices (end of period): 1995 7.4; 1996 4.8; 1997 7.7; 1998 10.0
  - Central government balance (percent of GDP): 1995 3.0; 1996 2.4; 1997 –0.9; 1998 –2.4
  - Current account balance (percent of GDP): 1995 –7.8; 1996 –7.9; 1997 –2.0; 1998 6.9
  - External debt (billions of U.S. dollars): 1995 82.6; 1996 90.5; 1997 91.8; 1998 89.7
  - Short-term debt (billions): 1995 41.1; 1996 37.6; 1997 29.9; 1998 22.8
  - External debt (percent of GDP): 1995 49.1; 1996 49.9; 1997 59.6; 1998 72.5
- Indonesia (1995, 1996, 1997, 1998 June program):
  - Real GDP growth: 1995 8.2; 1996 8.0; 1997 4.6; 1998 –13 to –14
  - Consumer prices (end of period): 1995 9.0; 1996 6.6; 1997 11.6; 1998 80.6
  - Central government balance (percent of GDP): 1995 0.9; 1996 1.2; 1997 –0.9; 1998 –8.5
  - Current account balance (percent of GDP): 1995 –3.2; 1996 –3.3; 1997 –1.8; 1998 1.6
  - External debt (billions of U.S. dollars): 1995 107.8; 1996 110.2; 1997 136.1; 1998 135.0
  - Short-term debt (billions): 1995 9.5; 1996 13.4; 1997 18.8
  - External debt (percent of GDP): 1995 53.3; 1996 48.5; 1997 64.5; 1998 162.7
- Korea (1995, 1996, 1997, 1998 May program):
  - Real GDP growth: 1995 8.9; 1996 7.1; 1997 5.5; 1998 –1 to –2
  - Consumer prices (end of period): 1995 4.7; 1996 4.9; 1997 6.6; 1998 8.2
  - Central government balance (percent of GDP): 1995 0.3; 1996 0.3; 1997 0.0; 1998 –1.7
  - Current account balance (percent of GDP): 1995 –1.9; 1996 –4.7; 1997 –1.9; 1998 7.3
  - External debt (billions of U.S. dollars): 1995 119.7; 1996 157.5; 1997 154.4; 1998 163.3
  - Short-term debt (billions): 1995 78.7; 1996 100.0; 1997 68.4; 1998 39.6
  - External debt (percent of GDP): 1995 26.4; 1996 32.5; 1997 34.9; 1998 51.5

### Article IV Consultations Concluded in 1997/98
- Table 7 lists countries and Board dates for Article IV consultations concluded in 1997/98, with PIN issuance dates where applicable. Selected entries include:
  - Algeria: June 27, 1997; PIN issued July 23, 1997
  - Argentina: February 4, 1998; PIN issued February 23, 1998
  - Brazil: February 11, 1998; PIN issued March 13, 1998
  - China, People’s Republic of: June 30, 1997 (no PIN issued)
  - India: July 2, 1997; PIN issued July 16, 1997
  - Indonesia: July 9, 1997 (no PIN issued)
  - Japan: July 25, 1997; PIN issued August 13, 1997
  - Korea entries correspond to program engagement and Letters of Intent in late 1997 and 1998.

*Italic: Content derived from the supplied IMF PDF chapter/section.*

### 1995. Problems in the financial sector were often com-

### _file12pdf - 1995. Problems in the financial sector were often com-

### Surveillance and financial-sector lessons
- Problems in the financial sector were often complex and long in gestation; many Directors felt the IMF needed to develop more expertise in their analysis, including by expanding staff resources with the relevant experience.
- Some Directors viewed the IMF’s comparative advantage as analyzing macroeconomic developments and suggested financial sector restructuring be left to other institutions, especially the World Bank; others argued the distinction was not always easy to draw in the context of the Asian crisis and that the IMF’s intensive role in financial sector reforms had been essential.
- Agreed priorities:
  - Close collaboration with other institutions (World Bank, national supervisory authorities, BIS) aimed at avoiding duplication of efforts.
  - Development of standards to aid surveillance and inform markets; IMF surveillance should encourage members to adapt practices in line with international standards, such as the Basle Committee on Banking Supervision’s Core Principles on Banking Supervision.
- Capital account issues:
  - Vulnerability of many emerging market economies to large capital flows underlines importance of close IMF surveillance over capital account issues.
  - Surveillance should monitor sequencing and pace of capital account liberalization, risks from reversal of large capital flows, rapid accumulation of short-term external debt, and impacts of selective liberalization.
  - Accurate and timely data are critically important.
  - Views on capital controls: a few speakers proposed systematic reporting on progress toward liberalization; some Directors saw a role for selective, well-targeted capital controls in reducing vulnerability; most Directors were skeptical about introducing controls in economies with already relatively open capital accounts, except perhaps to provide temporary breathing space.
- Lesson Three (policy interdependence and contagion):
  - IMF country-level surveillance should pay greater attention to policy interdependence and the risks of contagion; how policies in systemically or regionally important countries affect others should receive closer attention.
  - Bilateral consultations should examine vulnerability to external developments with the objective of urging early, forceful action to mitigate contagion risks.
  - Multilateral surveillance exercises should be more fully integrated with bilateral dialogue; available staff expertise in capital market and financial sector issues should be fully used in bilateral surveillance.
  - Many Directors supported more frequent and systematic exchange of views between staff and market participants; in relevant cases, staff reports should include a summary assessment being its surveillance work and its financial assistance under IMF-supported adjustment programs.

### Technical assistance and training
- Rationale and role:
  - Timely provision of effective technical assistance is a key ingredient in supporting governments’ efforts to sustain policy and institutional reform.
  - Technical assistance and training aim to strengthen economic management capacity so that, in the long run, members will have less need for IMF financing and can engage in a more productive dialogue with the IMF—described as the preventive aspect.
  - Given available resources, much IMF technical assistance was remedial—directed toward immediate problem solving or helping governments implement reforms within IMF-supported programs.
- Resource share and scale:
  - In 1997/98, technical assistance activity represented about 17 percent of total IMF administrative expenditures.
  - The IMF quantifies technical assistance in “person-years of services provided.” Recent annual volume ≈ 300 person-years.
  - Cost per unit increased owing to increases in compensation for outside experts and greater use of short-term experts.
- Regional shift and postconflict involvement:
  - Regional distribution shifted since 1995: countries of the two IMF European Departments absorbed 40 percent of technical assistance resources in 1995, dropping to 30 percent in 1997/98.
  - Share of countries in the African and the Middle Eastern Departments, taken together, rose to 37 percent from 28 percent over the same period.
  - IMF technical assistance and training increasingly involved postconflict countries; traditional “request-and-response” considered inadequate for urgent rehabilitation needs.

- Key technical assistance delivery statistics (effective person-years; Table 9)
  - Fund technical assistance resources: 220.0 (1994/95), 211.4 (1995/96), 172.7 (1996/97), 189.6 (1997/98)
  - Staff: 115.7 (1994/95), 108.6 (1995/96), 97.1 (1996/97), 103.9 (1997/98)
  - Headquarters-based consultants: 22.1, 23.5, 20.1, 20.8
  - Experts: 82.3, 79.3, 55.5, 64.9
  - External technical assistance resources: 80.5, 97.5, 104.2, 96.2
  - United Nations Development Programme: 16.6, 25.0, 21.5, 24.4
  - Japan: 51.4, 50.6, 67.3, 55.6
  - Other: 12.4, 7.5, 15.4, 16.2
  - Total technical assistance resources: 300.6, 309.0, 277.0, 285.7
  - Total resources by department (1997/98): Monetary and Exchange Affairs Department 110.6; Fiscal Affairs Department 98.8; Statistics Department 39.0; IMF Institute 12.1; Legal Department 10.3; Other 14.9
  - Total regional use by department (1997/98): African Department 65.8; Asia and Pacific Department 42.5; Central Asia Department n.a.; Southeast Asia and Pacific Department n.a.; European I Department 23.8; European II Department 52.6; Middle Eastern Department 29.5; Western Hemisphere Department 35.2; Interregional 8.6; Nonregional use 26.9
  - Note: An effective person-year of technical assistance is 260 days. Data for 1996/97 and 1997/98 include departmental reorganizations (Central Asia and Southeast Asia and Pacific merged effective January 1, 1997).

### Members’ use of IMF resources and credit outstanding (1997/98)
- Purchases from the GRA (excluding reserve tranche purchases) in 1997/98: SDR 19.0 billion, nearly four times the 1996/97 level of SDR 4.9 billion.
  - Composed of SDR 16.1 billion under Stand-By Arrangements (compared with SDR 1.8 billion in 1996/97) and SDR 2.8 billion under Extended Arrangements (SDR 2.8 billion in 1996/97).
  - Purchases under policy on emergency postconflict assistance: SDR 30 million in 1997/98.
  - No purchases under the Compensatory and Contingency Financing Facility (CCFF) in 1997/98 (SDR 0.3 billion in 1996/97).
- Largest users of IMF resources in 1997/98:
  - Korea: SDR 11.2 billion (including SDR 7.1 billion under the SRF)
  - Indonesia: SDR 2.2 billion
  - Thailand: SDR 2.0 billion
  - Russia: SDR 1.5 billion
  - Philippines: SDR 0.8 billion
  - Algeria: SDR 0.3 billion
  - Argentina: SDR 0.2 billion
  - Bulgaria: SDR 0.2 billion
  - Ukraine: SDR 0.2 billion
- By region (1997/98 purchases):
  - Asia: SDR 16.2 billion
  - Europe (including Baltic States, Russia, and other former Soviet Union): SDR 2.0 billion
  - Latin American, Middle Eastern, and African countries combined: SDR 0.7 billion
- Repurchases in the GRA during 1997/98: SDR 3.8 billion (compared with SDR 6.7 billion in 1996/97).
  - Largest repurchases by country in 1997/98: Argentina (SDR 0.5 billion); India, Mexico, and Russia (roughly SDR 0.4 billion each); Algeria, South Africa, and Venezuela (roughly SDR 0.3 billion each).
- Net change and outstanding credit:
  - IMF credit outstanding in the GRA increased by SDR 15.2 billion in 1997/98, to SDR 49.7 billion as of April 30, 1998 from SDR 34.5 billion a year earlier.
  - IMF credit outstanding under all facilities increased by SDR 15.5 billion in 1997/98, to SDR 56.0 billion on April 30, 1998 from SDR 40.5 billion a year earlier.

### Stand-By, Extended Arrangements, and special facilities (1997/98)
- Stand-By Arrangements:
  - Nine new Stand-By Arrangements approved totaling SDR 27.3 billion.
  - Stand-By Arrangements totaling SDR 26.7 billion approved for Indonesia (SDR 7.3 billion), Korea (SDR 15.5 billion), the Philippines (SDR 1.0 billion), and Thailand (SDR 2.9 billion).
  - Korea arrangement included SDR 10.0 billion available until December 1998 under the SRF.
  - Additional Stand-By Arrangements totaling SDR 0.6 billion approved for Cape Verde, Estonia, Latvia, Ukraine, and Uruguay.
  - As of April 30, 1998, 14 countries had Stand-By Arrangements with total commitments of SDR 28.3 billion and undrawn balances of SDR 12.4 billion.
- Extended Arrangements:
  - Four new Extended Arrangements approved with commitments totaling SDR 2.8 billion (Argentina, Pakistan, Panama, Yemen); Argentina’s arrangement SDR 2.1 billion.
  - Extended Arrangement for the Philippines was augmented by SDR 0.3 billion.
  - As of April 30, 1998, 13 countries had Extended Arrangements, with commitments totaling SDR 12.3 billion and undrawn balances of SDR 6.8 billion.
- Special facilities and purchases:
  - No member used the CCFF in 1997/98; Buffer Stock Financing Facility inactive since 1983.
  - Three countries (Albania, Rwanda, Tajikistan) made purchases totaling SDR 30 million under emergency postconflict assistance in 1997/98.
- Overall new commitments under Stand-By and Extended Arrangements in 1997/98: SDR 30.4 billion (including the Philippines augmentation); nearly 90 percent approved for Asian countries affected by the regional financial crisis.

### SAF/ESAF and concessional financing (1997/98)
- ESAF activity:
  - Eight new ESAF Arrangements approved in 1997/98 for Cameroon, Côte d’Ivoire, Mongolia, Nicaragua, Pakistan, Senegal, Uganda, and Yemen with commitments totaling SDR 1.7 billion.
  - As of April 30, 1998, 33 ESAF Arrangements were in effect.
  - Cumulative commitments under all approved SAF and ESAF Arrangements (excluding undisbursed amounts under expired and canceled arrangements) totaled SDR 10.3 billion as of April 30, 1998, compared with SDR 8.8 billion a year earlier.
  - Total ESAF disbursements in 1997/98: SDR 1.0 billion (SDR 0.7 billion in 1996/97); cumulative SAF and ESAF disbursements through April 30, 1998: SDR 8.1 billion.
  - As of April 30, 1998, total disbursements of SDA resources under SAF and ESAF Arrangements amounted to SDR 2.2 billion.
  - Note: The SAF has been phased out; the last annual SAF Arrangement expired in December 1996.

### Selected financial indicators (excerpts from Table 12; Millions of SDRs)
- Total disbursements (financial year ended April 30):
  - 1990: 5,266
  - 1996: 11,178
  - 1996/97: 5,644
  - 1997/98: 19,924
- Purchases by facility (GRA) during period (selected):
  - Stand-By and first credit tranche in 1997/98: 16,127 (line shows large figure for 1997/98)
  - Extended Fund Facility 1997/98: 2,824
  - Loans under SAF/ESAF arrangements in 1997/98: 973
- Repurchases and repayments (end of period 1997/98): 4,385 (repurchases 3,789; trust fund and SAF/ESAF repayments 596)
- End of period total outstanding credit provided by IMF:
  - 1996/97: 40,488
  - 1997/98: 56,026
  - Of which General Resources Account: 49,701 (as of April 30, 1998)
  - ESAF Trust (end of period 1997/98): 5,314

### Precautionary balances, income, and charges (1997/98 and 1998/99 decisions)
- Unpaid charges and adjustments:
  - Unpaid charges due by members in protracted arrears and contributions to the SCA-1 resulted in adjustments to the basic rate of charge of 18 basis points and to the rate of remuneration of 21 basis points during 1997/98.
  - Adjusted rate of charge averaged 4.59 percent and adjusted rate of remuneration averaged 3.97 percent during the financial year.
- Net income and reserves:
  - Retroactive reductions of charges totaling SDR 53 million; net income of SDR 164 million for 1997/98 placed to IMF’s reserves, of which SDR 65 million was placed to the General Reserve.
  - Total reserves increased to SDR 2.1 billion as of April 30, 1998, from SDR 2.0 billion a year earlier.
- Board decision for 1998/99:
  - Proportion of the rate of charge to the SDR interest rate set at 107 percent to achieve a target amount of net income of SDR 107 million (in addition to SRF income). An equal amount is to be added to the SCA-1. Net operational income from the SRF for 1998/99, after ESAF Trust administration expenses, will be placed to the General Reserve at the end of the financial year.
- Precautionary balances and coverage:
  - Precautionary balances generally available to protect IMF’s financial position against overdue repurchases in the GRA (reserves plus SCA-1) totaled SDR 3.0 billion as of April 30, 1998, equivalent to 293 percent of outstanding GRA credit to member countries in arrears by six months or more (SDR 1.0 billion).
  - Total precautionary balances (reserves and balances in the two SCAs) amounted to SDR 4.0 billion, equivalent to 8.1 percent of total outstanding GRA credit as of April 30, 1998.
  - Directors agreed to accelerate accumulation of precautionary balances in light of expansion of outstanding IMF credit during 1997/98.

### Overdue financial obligations and strengthened cooperative strategy
- Overdue obligations:
  - Outstanding overdue financial obligations to the IMF increased slightly in 1997/98 to SDR 2.3 billion on April 30, 1998, from SDR 2.2 billion a year earlier.
  - Number of countries in arrears by six months or more remained at seven in 1997/98.
- Composition of arrears (Table 14, as of April 30, 1998; Millions of SDRs)
  - Afghanistan, Islamic State of: Total 2.5 (General Department 2.5)
  - Congo, Democratic Republic of the: Total 334.0 (General Department 328.6; SDR Department 5.4)
  - Iraq: Total 33.0 (General Department 33.0)
  - Liberia: Total 454.6 (General Department 407.4; SDR Department 16.4; Trust 30.8)
  - Somalia: Total 194.3 (General Department 180.4; SDR Department 6.2; Trust 7.7)
  - Sudan: Total 1,156.2 (General Department 1,079.0; SDR Department 0.1; Fund 77.1)
  - Yugoslavia, Federal Republic of (Serbia/Montenegro): Total 86.6 (General Department 71.1; SDR Department 15.5)
  - Total overdue obligations: 2,261.2 (General Department 2,066.5; SDR Department 79.1; Trust 115.6)
- Ineligibility and declarations:
  - Four countries ineligible to use general resources as of April 30, 1998: Democratic Republic of the Congo (formerly Zaïre), Liberia, Somalia, Sudan. These four accounted for 95 percent of total overdue obligations on that date.
  - Declarations of noncooperation in effect for: Democratic Republic of the Congo (issued February 14, 1992), Liberia (March 30, 1990), Sudan (September 14, 1990).
  - Voting rights suspended for: Democratic Republic of the Congo (effective June 2, 1994) and Sudan (effective August 9, 1993).
- Strengthened cooperative strategy (since May 1990) elements:
  - Prevention: strong and comprehensive macroeconomic adjustment program supported by an IMF arrangement; technical assistance; assurance of adequate financing; assessments of medium-term BOP viability and capacity to repay.
  - Intensified collaboration: framework for cooperating members in arrears to establish track records of policy performance and payments to mobilize bilateral and multilateral support and clear arrears; use of rights approach.
  - Remedial measures: continued implementation to resolve protracted arrears; example noted of Sudan’s 1997 decision to accept a staff-monitored program and proposed payment schedule for 1998 as part of conditionality and remedial engagement.

### SDR Department and Amendment proposal
- SDR context:
  - SDR is an international reserve asset created under the First Amendment; first allocated January 1970; total SDR allocations amount to SDR 21.4 billion.
  - SDRs are held largely by IMF member countries; prescribed holders (15 as of 1997/98) may also hold SDRs but do not receive allocations.
  - At end of 1997/98, currencies of four member countries were pegged to the SDR.
- Amendment proposal (September 1997 Board of Governors resolution):
  - Following review of SDR role and to ensure equitable cumulative SDR allocations, the Board adopted a resolution proposing a Fourth Amendment to the Articles of Agreement.
  - If approved by the membership, the amendment would provide authority under Article XV for a special one-time allocation of SDR 21.4 billion to raise all participants’ ratios of cumulative SDR allocations to quota under the Ninth General Review of Quotas to a common benchmark ratio of 29.315788813 percent.

*Italicized source attribution provided by the pipeline.*

### Appendix II, Table II.11 shows the amount of SDRs

### _file12pdf - Appendix II, Table II.11 shows the amount of SDRs

### Special SDR allocation and amendment
- Appendix II, Table II.11 shows the amount of SDRs each participant will be eligible to receive under the special allocation.
- Proposed amendment mechanics:
  - Becomes effective when approved by three-fifths of the members having 85 percent of the total voting power.
  - Provides for future participants to receive a special allocation following the later of (1) the date of their participation or (2) the effective date of the Fourth Amendment.
  - Would not affect the IMF’s existing power to allocate SDRs based on a finding of a long-term global need to supplement reserves as and when that need arises.

### SDR valuation and interest rate basket
- Since January 1, 1981, the value of, and interest rate on, the SDR has been based on a basket of five currencies.
- In September 1995, the Board reviewed the valuation of the SDR; the valuation basket was revised effective January 1, 1996.
- Criteria for currencies included in the basket:
  - Those of the five member countries with the largest exports of goods and services during the five-year period ended one year prior to the date of the revision.
  - The currencies in the current (1996) basket are the same as those in the previous basket; weights were modified to reflect changes in relative importance in international trade and reserves.
- Initial weights and corresponding amounts in the revised basket (As of January 1, 1996) — Table 15:
  - U.S. dollar: Percentage Weight 39; Amount of Currency Units 0.582
  - Deutsche mark: Percentage Weight 21; Amount of Currency Units 0.446
  - Japanese yen: Percentage Weight 18; Amount of Currency Units 27.2
  - French franc: Percentage Weight 11; Amount of Currency Units 0.813
  - Pound sterling: Percentage Weight 11; Amount of Currency Units 0.105
- Since August 1, 1983, the SDR interest rate has been calculated weekly as a weighted average of interest rates on selected short-term instruments in the five countries whose currencies are included in the valuation basket.
- With effect from January 1, 1991, the interest rates and instruments used are:
  - Market yield on three-month treasury bills in the United States and the United Kingdom.
  - Three-month interbank deposit rate in Germany.
  - Three-month rate on certificates of deposit in Japan.
  - Three-month rate for treasury bills in France.

### SDR transactions and operations (1997/98 highlights)
- Total transfers of SDRs in 1997/98: SDR 20.3 billion (increased slightly from SDR 19.8 billion in 1996/97).
- Increase in transfers among participants and prescribed holders: SDR 1.5 billion (offset a decline in transfers involving the GRA).
- Selected totals from Table 16 (Transfers of SDRs, Annual Averages and Financial Years):
  - Total transfers (selected years/periods): 1,792; 7,556; 9,971; 17,404; 18,472; 27,448; 19,773; 20,256; 342,408 (aggregate column shown in table).
  - Transfers among participants and prescribed holders (financial year ended April 30, 1998): 5,016 (from own holdings); 14,727 (from purchase of SDRs from IMF); transactions by agreement 94,132 (annual average column shows large cumulative figures across periods).
  - Total transfers from participants to General Resources Account (financial year ended April 30, 1998): 36,756 (Repurchases); 36,386 (Charges); 25,097 (Quota payments); Interest received on GRA holdings 4,102.
  - Transfers from General Resources Account to participants and prescribed holders (financial year ended April 30, 1998): Purchases 56,629; Repayments of IMF borrowings 11,620; Interest on IMF borrowings 4,286; Remuneration 19,333.
  - General Resources Account holdings at end of period (selected column): 1,371; 5,445; 4,335; 1,960; 1,001; 825; 1,494; 764; 764.
- Note: Table 16 includes multiple period columns and annual averages; the table reports detailed flows among categories including prescribed operations, IMF-related operations, net interest on SDRs, and totals for GRA interactions.

### Organization, staffing, and support services (1997/98)
- Support services: Administration Department; Secretary’s Department; bureaus, offices, and secretariats responsible for computer services, translation, auditing, evaluation, budget, technical assistance, and investments under the staff retirement plan.
- Staff appointment principle: Managing Director appoints a staff whose sole responsibility is to the IMF; aim for highest standards and geographical diversity.
- Staff counts and composition (as of December 31, 1997):
  - Assistant staff: 693
  - Professional and managerial staff: 1,488 (approximately two-thirds economists)
  - Other authorized staff positions: some 480 (experts, consultants, Economist Program participants, and other nonregular resources)
  - Member country representation on staff: 122 of the IMF’s 182 member countries
- Staff-years used in 1997/98: 2,941 (compared with 2,904 in 1996/97)
  - Regular staff-years: 1,988 (1,999 in 1996/97)
  - Supplemented by other resources for total of 2,585 staff-years (2,545 in 1996/97)
  - Office of Executive Directors: 230 staff-years (232 in 1996/97)
  - Externally financed technical assistance experts and related overhead: 125 staff-years (127 in 1996/97)

### Recruitment, retention, separations, and salary policy
- Recruitment in 1997:
  - 149 new staff joined (84 economists, 26 professionals in specialized career streams, 39 assistants)
  - Compared with 133 staff hired in 1996
  - Of the 1997 hires: 49 were mid-career economists (up from 30 in 1996); 31 entered the Economist Program
  - Economist Program: two-year program; participants typically completing a Ph.D. or recently graduated with one or two years’ work experience; successful participants may be offered regular staff appointments.
- Separations in 1997:
  - 137 staff separated (increase of 22 over 1996)
  - Separation rate of professional staff rose to 7 percent (104 staff) in 1997 from 5!/2 percent (82 staff) in 1996
  - Increase in turnover largely due to resignations of economists joining private sector financial firms
- Salary structure and adjustments:
  - IMF salary structure reviewed annually against selected private financial and industrial firms and public sector organizations in the United States, France, and Germany
  - Salary structure increased by 4.3 percent in 1997/98
  - Board approved an increase of 4.3 percent for 1998/99

### Diversity initiatives and progress
- Diversity viewed as an important asset; Special Advisor on Diversity designed initiatives to enhance nationality and gender diversity (Table 18).
- Departments implemented diversity action plans in 1997/98, typically including:
  - Mentoring
  - Recognition of diversity needs in career development
  - Flexible work arrangements
  - More emphasis on diversity in recruitment
  - Grade and salary equity initiatives
- Expanded monitoring showed some progress in recruitment, promotions, and representativeness across staff groups; full achievement of satisfactory diversity will take time.

### Gender and regional staff distribution (selected figures from Tables 17 and 18)
- Nationality distribution of professional and managerial staff by region (percent), selected entries for 1997:
  - Africa: 5.2
  - Asia: 15.0
  - Japan: 1.6
  - Other Asia: 13.4
  - Europe: 33.2
  - France: 4.5
  - Germany: 3.8
  - Italy: 2.8
  - United Kingdom: 7.0
  - Other Europe: 14.0
  - Middle East: 6.1
  - Western Hemisphere: 40.5
  - Canada: 3.5
  - United States: 25.5
  - Other Western Hemisphere: 11.5
  - Total: 100.0
- Gender distribution of staff by level (selected 1997 figures, Table 18):
  - Total staff (all levels) 2,181: Women 1,014 (46.5 percent); Men 1,167 (53.5 percent)
  - Support staff total 693: Women 585 (85.6 percent); Men 108 (14.4 percent)
  - Professional staff total 1,179: Women 390 (33.1 percent); Men 789 (66.9 percent)
  - Economists total 770: Women 150 (19.5 percent); Men 620 (80.5 percent)
  - Managerial staff total 309: Women 31 (10.0 percent); Men 278 (90.0 percent)

### Administrative and Capital Budgets: medium-term outlook and 1997/98 results
- Medium-term budget outlook:
  - Administrative Budget considered in a rolling three-year outlook; Capital Budget in a rolling five-year outlook.
  - Board supported modest increase in authorized staff in 1998/99 to carry out additional work arising from the financial crisis in Asia and other priority activities, with staffing reductions projected in financial years 2000 and 2001 once crisis abates.
  - Administrative expenses projected to remain relatively flat in real terms over the medium term, with internal redeployment from lower priority activities to front-line activities.
  - Capital Budget outlook consistent with continuing and finalizing major building projects and investments required for code compliance and equipment maintenance.

- Budgets and expenditure in 1997/98:
  - Administrative Budget for financial year ended April 30, 1998 (1997/98): $503.7 million (approved).
  - Actual administrative expenditures during the year: $495.3 million.
  - Capital Budget: $27.2 million approved for projects beginning in financial year 1998 and $17.0 million approved for Part 3 of the Building Fit-Out Project (Phase III).
  - Capital project disbursements during 1997/98: $56.3 million, including $40.5 million for major building projects.
  - Administrative Budget resource use proportions (1997/98 estimated):
    - Surveillance and use of IMF resources (including programs/intensive classifications, resident representatives, technical assistance): 66.1 percent of expenses
    - External relations: 4.7 percent
    - Administrative support: 18.2 percent
    - Board of Governors: 4.0 percent
    - Executive Board: 7.1 percent

### Budget plans for 1998/99 and cost breakdowns
- IMF work program priorities for 1998/99:
  - Strengthening multilateral, regional, and bilateral surveillance, including strengthening international monetary system architecture.
  - Increased work associated with the use of IMF resources as a result of the ESAF and the HIPC Initiative.
  - Continued provision of technical assistance to members.
  - Intensified external relations and communication efforts.
- Board-approved Administrative Budget for 1998/99 (April 1998): $519.5 million (3.1 percent increase over previous year).
- Capital projects budget for 1998/99 approved: $14.4 million.
- Estimated cost of major IMF activities (Table 19, Millions of U.S. dollars):
  - Surveillance: 1997 $132.4 (28.1 percent of year), 1998 $141.1 (28.5 percent), 1999 $149.6 (28.8 percent)
  - Use of IMF resources: 1997 $116.7 (24.7 percent), 1998 $104.3 (21.1 percent), 1999 $126.3 (24.3 percent)
  - Technical assistance: 1997 $65.7 (13.9 percent), 1998 $81.6 (16.5 percent), 1999 $80.3 (15.5 percent)
  - External relations: 1997 $21.2 (4.5 percent), 1998 $23.2 (4.7 percent), 1999 $24.1 (4.6 percent)
  - Administrative support: 1997 $78.5 (16.6 percent), 1998 $90.1 (18.2 percent), 1999 $80.8 (15.6 percent)
  - Executive Board (subtotal): 1997 $36.4 (7.7 percent), 1998 $35.4 (7.1 percent), 1999 $37.7 (7.3 percent)
  - Board of Governors: 1997 $20.6 (4.4 percent), 1998 $19.6 (4.0 percent), 1999 $20.7 (4.0 percent)
  - Total: 1997 $471.6; 1998 $495.3; 1999 $519.5
  - Note: Table 19 indicates details may not add to total because of rounding.

### Administrative and Capital Budgets, Financial Years 1996–99 (selected figures, Table 20)
- Administrative Budget totals:
  - Total Administrative Budget: 1996 $470,836 (thousands of U.S. dollars); 1997 $471,564; 1998 actual expenses $495,279; 1999 budget $519,533.
  - Less reimbursements:
    - Reimbursement for administering the SDR Department: 1996 –$5,841; 1997 –$5,914; 1998 –$6,000; 1999 –$5,800.
    - Reimbursement for administering the SAF/ESAF: 1996 –$35,634; 1997 –$43,788; (note columns for 1998/1999 show decision context).
  - Net Administrative Budget expenses:
    - 1996: $429,361
    - 1997: $421,862
    - 1998: $489,279
    - 1999: $513,733
- Capital Budget:
  - Capital project budgets (multiyear projects beginning in each financial year): 1996 $152,500; 1997 $20,123; 1998 $27,240; 1999 $14,440 (thousands of U.S. dollars)
  - Capital project disbursements: 1996 $34,800; 1997 $151,500; 1998 $56,061; 1999 $46,391
- Personnel and other expense detail (selected lines, thousands of U.S. dollars):
  - Salaries: 1996 $210,216; 1997 $216,350; 1998 $229,150; 1999 budget $247,270
  - Other personnel expenses: 1996 $131,115; 1997 $129,550; 1998 $117,213; 1999 $126,019
  - Subtotal personnel: 1996 $341,331; 1997 $345,901; 1998 $346,363; 1999 $373,289
  - Other expenses subtotal: 1996 $162,743; 1997 $165,033; 1998 $184,752; 1999 $188,368
  - Reimbursements: 1996 –$33,239; 1997 –$39,368; 1998 –$35,836; 1999 –$42,124

*Source: Appendix II and related tables and text from the IMF Annual Report 1998 (sections reproduced in the provided PDF content).*

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