Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund
IMF News, November 17, 2001
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- Published: November 17, 2001
Meeting context and purpose
- Fourth meeting of the International Monetary and Financial Committee held in Ottawa on November 17, 2001, under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom.
- The Committee expresses gratitude to Finance Minister Paul Martin and the Canadian government for hosting the meeting and for the excellent arrangements.
- The Committee welcomes the Managing Director's October 5 statement on the situation of the world economy and the IMF response.
Global outlook, uncertainty, and policy stance
- The September 11 terrorist attacks have prolonged the slowdown in the world economy and increased uncertainty.
- Bold policy action has already been taken to support a robust recovery during 2002, but the outlook remains subject to considerable uncertainty.
- Key recommendations and findings:
- Continuing vigilance is needed; the international community should stand ready to take timely action to maintain stability and invigorate growth.
- The IMF has a central role, including through a strengthened focus on surveillance, to ensure global macroeconomic and financial stability and to ensure that globalization works for the benefit of all.
Advanced economies: monetary, fiscal, and structural recommendations
- Findings:
- Recent easing of monetary policy in the United States, the euro area, and other advanced economies is welcome.
- Scope for discretionary fiscal policy action varies across countries; advanced economies should allow automatic stabilizers to operate.
- Recommendations:
- Authorities stand ready to take further action if appropriate.
- Determined implementation of structural reforms is important to restore confidence and growth, including:
- For Japan: vigorous reforms of its banking and corporate sectors.
- For Europe: priority to accelerating labor and product market reforms.
- The United States stands ready to take further action to support growth, consistent with maintaining sound public finances in the medium term.
Trade, Doha, and protectionism
- Findings:
- Increased trade opportunities will play a vital role in the recovery.
- The Committee strongly welcomes the outcome of the Doha meeting of the World Trade Organization and the Doha Development Agenda.
- Recommendations:
- All countries should stand firm against protectionist pressures.
- Advanced economies should improve access to their markets and reduce trade-distorting subsidies.
- The IMF should strengthen surveillance of trade issues and help promote international efforts to open markets.
- Monitoring:
- The Committee is vigilant on stability in the oil market at prices reasonable for consumers and producers.
Emerging markets and developing countries
- Challenges identified:
- Weakening of global demand, reduced capital flows, higher risk aversion in financial markets, reduced income from tourism, and lower and more volatile commodity prices.
- IMF role and instruments:
- The IMF stands ready to provide additional financial assistance, where needed, to those countries pursuing sound policies.
- The IMF has a range of instruments available and its current financial position is strong.
- The IMF should be ready to adjust its policies if necessary.
- The Contingent Credit Line (CCL) is highlighted as an important signal and safeguard; eligible countries are encouraged to consider applying for it.
- The Committee underscores the importance of involving the private sector in prevention and resolution of financial crises.
- The Committee recommends an early implementation of the Fourth Amendment.
Low-income countries, HIPCs, PRGF, and PRSP
- Concerns and calls to action:
- Particular concern at the adverse impact of the global slowdown on low-income countries and heavily indebted poor countries (HIPCs).
- Calls on the IMF, in close collaboration with the World Bank, to respond flexibly and proactively, including through additional concessional financing and debt relief where appropriate.
- Specific points:
- The Committee welcomes additional contributions to the Poverty Reduction and Growth Facility (PRGF) and encourages further contributions.
- The IMF and World Bank should intensify efforts within the Poverty Reduction Strategy Paper (PRSP) framework to assess poverty and social impacts of reforms.
- The Committee looks forward to discussing findings of the PRGF and PRSP Reviews at the Spring Meetings next year.
- The enhanced HIPC Initiative framework allows consideration of additional assistance at the completion point if a country's economic circumstances have fundamentally changed due to exceptional exogenous shocks.
- When updating HIPC debt sustainability analyses at completion point, the Committee recognizes the need to take into account worsening global growth prospects and declines in terms of trade.
- Heavily indebted poor countries are encouraged to work expeditiously toward meeting conditions for access to debt relief.
- Advanced economies must be prepared to provide increased development assistance and debt relief to tackle poverty reduction challenges and to achieve the Millennium Development Goals.
- The Committee reiterates the importance of fully financing the enhanced HIPC Initiative and urges bilateral donors to fulfill this commitment.
International cooperation and institutional coordination
- The Committee emphasizes the importance of close collaboration among international institutions.
- Committee members look forward to a joint discussion with the U.N. Secretary-General, Mr. Kofi Annan, including in the context of the upcoming Conference on Financing for Development.
- The Committee looks forward, with the Development Committee, to this collaboration.
Combating terrorist financing and money laundering
- The Committee expresses grave concern at use of the international financial system to finance terrorist acts and to launder proceeds of illegal activities.
- Calls on all member countries to ratify and implement fully UN instruments to counter terrorism, particularly United Nations Security Council Resolution 1373.
- Welcomes and supports the Special Recommendations of the Financial Action Task Force (FATF) to combat terrorist financing.
- Member-country obligations urged:
- Freeze, within jurisdiction, the assets of terrorists and their associates; close their access to the international financial system.
- Consistent with national laws, make public the list of terrorists whose assets are subject to freezing and the amount of assets frozen, if any, with monthly reports.
- IMF action plan (where consistent with its mandate and expertise) to intensify contribution:
- Extend IMF involvement beyond anti-money laundering to efforts aimed at countering terrorism financing.
- Expand anti-money laundering work, including through FSAPs, to cover legal and institutional frameworks.
- Accelerate Offshore Financial Center assessments, and undertake onshore assessments in the context of the FSAP.
- Help countries identify gaps in anti-money laundering and anti-terrorist financing regimes in the context of Article IV voluntary questionnaires.
- Enhance collaboration with the FATF on developing a global standard covering the FATF recommendations, and work to apply the standard on a uniform, cooperative, and voluntary basis.
- Increase technical assistance to enable members to implement effectively the agreed international standards.
- Additional international actions urged:
- All countries to establish financial intelligence units to receive and process reports of suspicious transactions and to monitor and analyze suspected terrorist funds.
- Provisions to ensure sharing of information and cooperation between national financial intelligence units, building on the work of the Egmont Group.
- Deployment of technical assistance to ensure that every country can play its part, based on support either bilaterally or through an international trust fund.
- Timetable and reporting:
- Countries are urged to take these measures as soon as possible, preferably by February 1, 2002.
- The IMF should report on progress at its spring 2002 meeting, with a full report at its Annual Meeting.
Surveillance, conditionality, standards, and governance
- The Committee encourages the IMF to continue strengthening surveillance and crisis prevention, including through implementation of standards and codes and related technical assistance.
- Calls on the IMF to implement the agreed framework for private sector involvement and to intensify analysis of outstanding issues.
- Welcomes progress on improving the effectiveness of conditionality by streamlining and enhancing country ownership of IMF-supported programs; looks forward to reviewing progress at the next meeting.
- Notes that quotas should reflect developments in the international economy and looks forward to further work on this issue.
- Looks forward to the Independent Evaluation Office (IEO) finalizing its work program and to receiving a progress report at the next meeting.
Personnel appreciation and next meeting
- The Committee expresses appreciation to Stanley Fischer and Jack Boorman for their records of service to the IMF.
- Next meeting of the IMFC scheduled in Washington, D.C. on April 21, 2002.
Annex — Leadership and representation (high-level)
- Chairman: Gordon Brown
- Managing Director: Horst Köhler
- Members or Alternates and Observers: list of named officials and alternates and observers provided in the Annex (includes ministers, central bank governors, and representatives from IMF member countries and international organizations).
Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund — November 17, 2001.