Annual Report cover 2003
Annual Report of the Executive Board

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

April 2003



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Ordering Information


File 1
398k pdf file
Message from the Managing Director
Executive Board
  Senior Officers
  IMF Governance and the Annual Report
  Letter of Transmittal

File 2
pdf file
1.   IMF Surveillance in Action
Country Surveillance
Global Surveillance
World Economic Outlook • Global Financial
Stability Report
Regional Surveillance
CAEMC • Euro Area and the EU • ECCU • WAEMU
2.   Strengthening Surveillance and Crisis Prevention
Follow-Up to 2002 Biennial Surveillance Review and
   Steps Forward
Building on the Success of the Standards and
   Codes Initiative and the FSAP
Data Provision for Surveillance Purposes
Signaling Assessments of Members' Policies
Review of the Contingent Credit Line
Improving Sustainability Analysis
Combating Money Laundering and
   the Financing of Terrorism
3.   A Better Framework for Crisis Resolution
Access Policy in Capital Account Crises
Policy on Lending into Arrears to Private Creditors
Dealing with Unsustainable Sovereign Debt
Collective Action Clauses • Sovereign Debt Restructuring Mechanism
4.   Improving Lending Policies and Practices
New Conditionality Guidelines
Strengthening IMF-World Bank Collaboration
Prolonged Use of IMF Resources

File 3
pdf file
5.   The Fight Against Poverty in Low-Income Countries
Aligning PRGF-Supported Programs and the
   PRSP Approach
Debt Sustainability in Heavily Indebted Poor Countries
Trade and Market Access
Monitoring Progress Toward the Millennium
   Development Goals
Looking Ahead
6.   Technical Assistance and Training
External Financing for Technical Assistance
Recent Developments
Technical Assistance Delivery in FY2003
IMF Institute
7.   Transparency, Accountability, and Cooperation
Transparency of the IMF and Its Members
Review of the IMF's External Communications Strategy
The Independent Evaluation Office
Strengthening the Voice and Representation of
   Developing Countries
8.   Financial Operations and Policies in FY2003
Regular Financing Activities
Lending • Resources and Liquidity
Quota Developments
Borrowing Arrangements
General Arrangements to Borrow
New Arrangements to Borrow
Concessional Financing
Poverty Reduction and Growth Facility
Enhanced HIPC Initiative
Post-Conflict Emergency Assistance
Income, Charges, Remuneration, and Burden Sharing
Special Drawing Rights (SDR) Developments
Safeguards Assessments
9.   Organization, Budget, and Human Resources
Executive Board • Departments •
Independent Evaluation Office
Administrative and Capital Budgets
Budget Reforms • Budgets and Actual Expenditure in FY2003 • Budgets for FY2004• Medium-Term Framework
Human Resources
Staff Changes • Recruitment and Retention • Salary Structure • Diversity
New Building

File 4
pdf file
I   International Reserves
II   Financial Operations and Transactions
III   Principal Policy Decisions of the Executive Board
IV   Relations with Other International Organizations
V   External Communications
VI   Press Communiqués of the International Monetary and Financial Committee and the Development Committe
VII   Executive Directors and Voting Power on April 30, 2003
VIII   Changes in Membership of the Executive Board
File 5
pdf file
IX   Financial Statements, April 30, 2003

Working to Strengthen Global Growth

Uncertainties in the world economic environment, coupled with the economic and financial difficulties faced by many member countries, posed numerous challenges for the IMF during the 2002/03 financial year.

Despite some signs in early 2002 that global economic growth was strengthening from the 2001 slowdown, the recovery subsequently faltered. Demand and activity were weakened by geopolitical uncertainties in the run-up to the war in Iraq, which affected both oil prices and confidence among consumers and businesses, as well as by continuing fallout from the collapse of equity markets during 2000­02. Monetary and fiscal policy actions taken by a number of countries provided support for demand, but world output growth in calendar year 2002, though somewhat higher than in 2001, was again well below trend. World trade growth picked up in 2002 from its 2001 low but was weaker than in any other year since the global recession of the 1980s.

In this environment, the IMF continued to work with its member countries to foster stronger sustainable growth through its policy advice and surveillance activities; its financial support for the efforts of members to tackle balance of payments problems; its financial assistance to low-income countries, promoting growth and poverty reduction; its technical assistance; and its continuing work on the reform of the international monetary system and of its own operations.

Surveillance and Crisis Prevention

The IMF oversees the international monetary system to ensure that it operates efficiently and it exercises surveillance over the exchange rate policies of its member countries. The Fund carries out these responsibilities by consulting with members on their economic and financial policies, and by regularly reviewing economic and financial developments at the global, regional, and country levels.

During FY2003, the IMF held bilateral (country) discussions with 136 members. It also took a number of steps to enhance the effectiveness of its surveillance and crisis prevention work. Among these efforts, it continued to develop a system to assess countries' vulnerability to balance of payments crises. The Board also proposed improvements to assessment exercises under the IMF's standards and codes initiative and the joint IMF­World Bank Financial Sector Assessment Program (FSAP); supported proposals to enhance data provision for surveillance; adopted a new framework for debt sustainability assessments; and endorsed further measures to strengthen surveillance in program countries. The IMF also advanced its contribution to combating money laundering and the financing of terrorism.

Crisis Resolution

Crisis prevention has always been the primary focus of the IMF's reform agenda. But because it is not likely that all crises can be prevented, the Fund has also worked to develop a more robust framework for crisis resolution. Specifically, the IMF has sought to combine a clearer policy on access to its resources and greater selectivity in its lending with a strengthening of mechanisms for restructuring sovereign debt.

In recent years, the IMF has supported some member countries' efforts to resolve capital account crises by providing large amounts of financing, often well above normal access limits. During FY2003, the Board discussed this policy and set more clearly defined criteria for such exceptional access in capital account crises.

The Board also reviewed recent experience in the restructuring of sovereign bonds and the policy of lending IMF resources to countries in arrears to private creditors, discussed the design and effectiveness of collective action clauses to facilitate debt restructuring, and considered a proposal for a sovereign debt restructuring mechanism to resolve unsustainable sovereign debt situations.

Lending Policies and Practices

The IMF provides financial support to member countries under a variety of policies and lending instruments. Most forms of IMF financing are made conditional on the recipient country's adopting policies to correct the underlying problems that gave rise to its need for support.

During FY2003, the IMF concluded a two-year review of the conditions attached to IMF-supported programs and approved new guidelines for designing and implementing such conditionality to enhance country ownership and program effectiveness.

The Board also discussed a progress report on strengthening collaboration with the World Bank in this area and concluded a discussion on prolonged use of IMF resources, based on a report by the Fund's Independent Evaluation Office (see below).

Fight Against Poverty in Low-Income Countries

The main objective of the IMF's work with low-income countries is to promote deep and lasting poverty reduction. In this work it follows the "two-pillar" strategy, endorsed by the international community in the Monterrey Consensus, which refers to the need both for low-income countries themselves to accept responsibility for pursuing sound policies, including good governance, and for the international community to provide stronger support for these efforts.

The Fund complements its policy advice with financial support for its poorest members through low-interest loans under the Poverty Reduction and Growth Facility (PRGF) and debt relief through the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. It also offers technical assistance to help countries build institutional capacity. The Board reviewed PRGF lending and the Poverty Reduction Strategy Paper (PRSP) process in FY2002. During FY2003, the IMF followed up on this review by paying increased attention in country programs to creating the right environment for investment and growth, bringing poverty and social impact analysis more systematically to bear in helping countries formulate poverty reduction strategies and PRGF-supported programs, and strengthening public expenditure management.

The IMF also advocated greater market access for developing country exports, including the phasing out of trade-distorting subsidies in industrial countries. As part of this work, it cooperated with the World Trade Organization on ways to enhance the coherence of the work of the two organizations, and stood ready to contribute to developing proposals for an agricultural trade agenda for Africa. The IMF also supported calls for more international aid and the system for monitoring actions aimed at achieving the United Nations' Millennium Development Goals.

Technical Assistance and Training

IMF technical assistance and training aim both to help countries strengthen their policymaking capacity and to assist them in designing particular policies.

In FY2003, the IMF provided 356 person-years of technical assistance. Reflecting new needs, technical assistance increased in FY2003 for post-conflict cases, regional initiatives, crisis prevention, and crisis resolution and management. Sub-Saharan Africa continued to receive the largest share. The IMF established two regional Africa Technical Assistance Centers (AFRITACs), in Tanzania (October 2002) and Mali (May 2003), to increase the volume, range, and coordination of assistance from various providers within the respective regions.

The IMF reviewed its technical assistance policies in FY2003. The 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 is an important source of support for technical assistance. In FY2003 such external financing accounted for about 30 percent of total IMF-directed technical assistance, with Japan the largest donor.


Many of the reforms introduced by the IMF in recent years have been based on a recognition that the Fund's effectiveness is improved by transparency in its development and provision of policy advice, accountability for the advice it provides, responsiveness to lessons drawn from past experiences, openness to outside views, and cooperation with other members of the international community.

In September 2002, the Board reviewed its transparency policy and discussed the next steps. Directors welcomed the increased release of country documents and other materials, but stressed that the IMF's transparency should not lessen the candor of its dialogue with members or of the staff's reporting.

In March 2003, the Board considered the IMF's external communications strategy. The review recognized that key objectives were to improve public understanding of the IMF's work and support for its policies, and to be more open to analysis and criticism of its work from outside. Directors agreed that more might be achieved by better focusing communications, including through more contact with legislatures and civil society organizations in member countries.

Independent Evaluation Office

The Independent Evaluation Office (IEO) was set up in July 2001 to conduct objective and independent assessments of issues related to the IMF's mandate. During FY2003, the IEO conducted three evaluation projects. These were on the prolonged use of IMF resources, the role of the IMF in three recent capital account crises (Brazil, Indonesia, and Korea), and fiscal adjustment in IMF-supported programs. After the Board broadly endorsed the first report in September 2002, IMF management set up a task force on ways to address the issues raised.

Financial Operations and Policies

In FY2003 a Stand-By Arrangement for Brazil amounting to SDR 22.8 billion ($31.5 billion)—the largest arrangement in IMF history—dominated new IMF lending commitments to its member countries. This arrangement, plus other large arrangements for Colombia and Argentina, and the augmentation of an existing arrangement for Uruguay, kept commitments in FY2003 relatively high. New commitments totaled SDR 29.4 billion ($40.7 billion),
SDR 10 billion lower than commitments in FY2002.

During the financial year, the IMF disbursed SDR 21.8 billion in loans from its General Resources Account. This total exceeded loan repayments of SDR 7.8 billion. Consequently, 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.

At the same time, the IMF's liquidity position remained adequate to meet the needs of its members. The one-year forward commitment capacity (FCC) amounted to SDR 61 billion at the end of FY2003. (The FCC—a new measure of liquidity, introduced in FY2003—indicates the amount of quota-based resources available for lending over the next 12 months.)

The IMF's concessional assistance is provided under the PRGF and the HIPC Initiative. Ten new PRGF arrangements were 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, the adjustment and reform efforts of 36 countries were being supported by PRGF arrangements, with commitments totaling SDR 4.5 billion and undrawn balances of SDR 2.5 billion. By the 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.

The IMF also provides emergency assistance through loans to countries emerging from conflict. By the end of FY2003, seven donor countries had pledged SDR 11.5 million in subsidies for such loans, and disbursements to seven affected countries totaled SDR 1.4 million.


The 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).

Organization, Budget, and Human Resources

FY2003 saw a number of institutional changes. The Monetary and Financial Systems Department replaced the Monetary and Exchange Affairs Department, reflecting its expanded responsibilities. The Treasurer's Department was renamed the Finance Department. It was announced that Deputy Managing Director Eduardo Aninat would leave his post in June 2003, and that Economic Counsellor and Director of the Research Department Kenneth Rogoff would return to Harvard University in fall 2003. They will be succeeded, respectively, by Agustín Carstens, Mexico's Deputy Secretary of Finance, and Raghuram Rajan of the University of Chicago Graduate School of Business.

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