Annual Report of the Executive Board for the Financial Year Ended April 30, 2003

Annual Report of the Executive Board, April 30, 2003

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Annual Report of the Executive Board for the Financial Year Ended April 30, 2003

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Bibliographic details

• Published: April 30, 2003
• Series: Annual Report of the Executive Board

Overview

• Reviews the IMF's activities, resources, and policies during the financial year (May 1, 2002 through April 30, 2003), as well as developments in the world economy.
• Working to strengthen global growth amid uncertainties from geopolitical events, oil-price effects, equity market fallout from 2000–02, and weaker-than-trend world output growth in calendar year 2002.
• IMF roles emphasized: policy advice and surveillance; financial support for balance of payments problems; financial assistance to low-income countries for growth and poverty reduction; technical assistance; reform of the international monetary system and IMF operations.

Surveillance and Crisis Prevention

• IMF responsibilities: oversee the international monetary system and exercise surveillance over exchange rate policies of member countries.
• During FY2003, the IMF held bilateral (country) discussions with 136 members.
• Steps taken to enhance surveillance and crisis prevention:
  • Continued development of a system to assess countries' vulnerability to balance of payments crises.
  • Proposed improvements to assessment exercises under the standards and codes initiative and the joint IMF–World Bank Financial Sector Assessment Program (FSAP).
  • Supported proposals to enhance data provision for surveillance.
  • Adopted a new framework for debt sustainability assessments.
  • Endorsed measures to strengthen surveillance in program countries.
  • Advanced contribution to combating money laundering and the financing of terrorism.

Crisis Resolution

• Emphasis on crisis prevention, with recognition that not all crises can be prevented.
• Efforts to develop a more robust framework for crisis resolution by combining:
  • A clearer policy on access to IMF resources and greater selectivity in lending.
  • Strengthening mechanisms for restructuring sovereign debt.
• FY2003 Board actions:
  • Discussed and set more clearly defined criteria for exceptional access in capital account crises.
  • Reviewed experience in restructuring sovereign bonds and the policy of lending into arrears to private creditors.
  • Discussed collective action clauses and a proposal for a sovereign debt restructuring mechanism.

Lending Policies and Practices

• IMF financing typically conditional on recipient policy adjustments.
• Completed a two-year review of conditions attached to IMF-supported programs; approved new conditionality guidelines to enhance country ownership and program effectiveness.
• Discussed strengthening collaboration with the World Bank.
• Board concluded a discussion on prolonged use of IMF resources, based on an Independent Evaluation Office (IEO) report.

Fight Against Poverty in Low-Income Countries

• Objective: promote deep and lasting poverty reduction via a "two-pillar" strategy from the Monterrey Consensus.
• Instruments and focus:
  • Poverty Reduction and Growth Facility (PRGF) for low-interest loans.
  • Enhanced Heavily Indebted Poor Countries (HIPC) Initiative for debt relief.
  • Technical assistance to build institutional capacity.
• FY2003 programmatic focus:
  • Greater attention to creating the right environment for investment and growth.
  • More systematic use of poverty and social impact analysis in PRGF-supported programs.
  • Strengthening public expenditure management.
  • Advocacy for greater market access for developing country exports and phasing out trade-distorting subsidies in industrial countries.
  • Cooperation with the World Trade Organization and support for monitoring actions toward the United Nations' Millennium Development Goals.

Technical Assistance and Training

• FY2003 delivery: 356 person-years of technical assistance.
• Increased technical assistance for post-conflict cases, regional initiatives, crisis prevention, and crisis resolution and management.
• Sub-Saharan Africa received the largest share.
• Two regional Africa Technical Assistance Centers (AFRITACs) established:
  • Tanzania (October 2002)
  • Mali (May 2003)
• Board endorsed measures to introduce an institution-wide methodology for monitoring and evaluation and to set up a comprehensive accounting system to capture the full cost of technical assistance.
• External financing accounted for about 30 percent of total IMF-directed technical assistance in FY2003, with Japan the largest donor.

Transparency, Accountability, and Cooperation

• Reforms grounded in transparency, accountability, learning from past experiences, openness to outside views, and cooperation.
• September 2002 Board review of transparency policy: welcomed increased release of country documents but emphasized preserving candor in staff dialogue and reporting.
• March 2003 review of external communications strategy: objectives to improve public understanding and support, and to be more open to external analysis and criticism; recommended better-focused communications and more contact with legislatures and civil society.
• Independent Evaluation Office (IEO) established July 2001; conducted three evaluation projects during FY2003:
  • Prolonged use of IMF resources (broadly endorsed by the Board in September 2002).
  • Role of the IMF in three recent capital account crises (Brazil, Indonesia, and Korea).
  • Fiscal adjustment in IMF-supported programs.
• Management set up a task force to address issues raised by the IEO report on prolonged use of IMF resources.

Financial Operations and Policies in FY2003

• Major lending and liquidity figures:
  • Stand-By Arrangement for Brazil amounting to SDR 22.8 billion ($31.5 billion) — the largest arrangement in IMF history — dominated new lending commitments.
  • New commitments totaled SDR 29.4 billion ($40.7 billion), SDR 10 billion lower than commitments in FY2002.
  • IMF disbursed SDR 21.8 billion in loans from its General Resources Account; loan repayments were SDR 7.8 billion.
  • IMF credit outstanding at end-April amounted to a record high of SDR 66 billion ($91.3 billion), SDR 13.9 billion higher than a year earlier.
  • One-year forward commitment capacity (FCC) amounted to SDR 61 billion at the end of FY2003.
• Concessional financing and PRGF:
  • Ten new PRGF arrangements approved during the financial year, with commitments totaling SDR 1.2 billion, and one existing loan was increased.
  • Total PRGF disbursements in FY2003 amounted to SDR 1.2 billion.
  • At end-April, 36 countries were supported by PRGF arrangements, with commitments totaling SDR 4.5 billion and undrawn balances of SDR 2.5 billion.
• HIPC Initiative:
  • By end of FY2003, eight countries had reached their completion points under the enhanced HIPC Initiative, and another 18 had passed their decision points and had begun to receive interim debt relief.
• Emergency post-conflict assistance:
  • Seven donor countries pledged SDR 11.5 million in subsidies for such loans.
  • Disbursements to seven affected countries totaled SDR 1.4 million.

Membership and Institutional Changes

• Democratic Republic of Timor-Leste (formerly East Timor) became the 184th member of the IMF on July 23, 2002.
  • Timor-Leste's initial quota in the IMF was set at SDR 8.2 million (about $11 million).
• Organizational changes in FY2003:
  • Monetary and Financial Systems Department replaced the Monetary and Exchange Affairs Department.
  • Treasurer's Department renamed the Finance Department.
  • Announced leadership changes:
  • Deputy Managing Director Eduardo Aninat to leave in June 2003; successor Agustín Carstens.
  • Economic Counsellor and Director of the Research Department Kenneth Rogoff to return to Harvard University in fall 2003; successor Raghuram Rajan.

Key Statistics and Figures

• Financial year covered: May 1, 2002 through April 30, 2003.
• Bilateral country discussions during FY2003: 136 members.
• Technical assistance provided in FY2003: 356 person-years.
• External financing share of IMF-directed technical assistance in FY2003: about 30 percent.
• Stand-By Arrangement for Brazil: SDR 22.8 billion ($31.5 billion).
• New commitments in FY2003: SDR 29.4 billion ($40.7 billion).
• New commitments change vs FY2002: SDR 10 billion lower than commitments in FY2002.
• Disbursements from General Resources Account in FY2003: SDR 21.8 billion.
• Loan repayments in FY2003: SDR 7.8 billion.
• IMF credit outstanding at end-April FY2003: SDR 66 billion ($91.3 billion), SDR 13.9 billion higher than a year earlier.
• One-year forward commitment capacity (FCC) at end of FY2003: SDR 61 billion.
• PRGF new arrangements in FY2003: Ten; commitments totaling SDR 1.2 billion.
• Total PRGF disbursements in FY2003: SDR 1.2 billion.
• PRGF-supported countries at end-April: 36; commitments totaling SDR 4.5 billion; undrawn balances SDR 2.5 billion.
• Enhanced HIPC Initiative completion points reached by end of FY2003: eight countries; decision points passed by another 18 countries.
• Donor subsidies pledged for post-conflict emergency loans: SDR 11.5 million.
• Disbursements to affected countries for emergency assistance: SDR 1.4 million.
• IMF membership count after Timor-Leste accession: 184 members.
• Timor-Leste initial quota: SDR 8.2 million (about $11 million).

Source: Annual Report of the Executive Board for the Financial Year Ended April 30, 2003.

Content in this bundle

• IMF Annual Report 2003--file 1 of 5
  • IMF Annual Report 2003--file 1 of 5 (Markdown version)
  • IMF Annual Report 2003--file 1 of 5 (PDF)
• IMF Annual Report 2003--file 2 of 5
  • IMF Annual Report 2003--file 2 of 5 (Markdown version)
  • IMF Annual Report 2003--file 2 of 5 (PDF)
• IMF Annual Report 2003--file 3 of 5
  • IMF Annual Report 2003--file 3 of 5 (Markdown version)
  • IMF Annual Report 2003--file 3 of 5 (PDF)
• IMF Annual Report 2003--file 1 of 5
  • IMF Annual Report 2003--file 1 of 5 (Markdown version)
  • IMF Annual Report 2003--file 1 of 5 (PDF)
• IMF Annual Report 2003--file 5 of 5
  • IMF Annual Report 2003--file 5 of 5 (Markdown version)
  • IMF Annual Report 2003--file 5 of 5 (PDF)

References

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