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United Kingdom and the IMF

Heavily Indebted Poor Countries -- A Factsheet

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Joint Press Conference of
Gordon Brown, Chairman, Interim Committee
and Michel Camdessus, Managing Director,
International Monetary Fund
At the Conclusion of the Meeting of the Interim Committee

Also Present: Thomas C. Dawson II, Director,
External Relations Department, IMF

September 26, 1999
IMF Meeting Hall
Washington, D.C.

MR. DAWSON: Good evening. I am Tom Dawson, Director of the External Relations Department of the IMF. This is a live press conference to review the outcome of today's 53rd meeting of the Interim Committee of the Board of Governors of the International Monetary Fund.

To my left is Gordon Brown, United Kingdom Chancellor of the Exchequer and Chairman of the Interim Committee; and Michel Camdessus, Managing Director of the IMF.

Before we start this briefing, a point of order. When the question and answer period begins, I ask that reporters identify themselves and their affiliations. Thank you.

Chancellor Brown.

MR. BROWN: I would like to take this opportunity to take you through both the joint meeting of the Interim and Development Committees this morning and the Interim Committee meeting which has just finished. Let me say, first of all, that I believe that the joint committee that we had this morning symbolized the cooperation and commitment of all countries and institutions to the enhanced debt relief initiative, which will provide faster, deeper, and broader debt relief with the central goal of reducing poverty in the world's poorest countries. Let me first take you through the communiqué, that you will receive in a few minutes, on the detail of the Interim Committee.

We discussed global economic and financial conditions. We welcomed the marked improvement since the beginning of the year. Among the major industrial countries, a sustained pickup in Europe and Japan will help to achieve a more balanced pattern of growth. We emphasized the importance of open and competitive markets as a key component of efforts to sustain growth and stability in the global economy. We believe the launch of the new trade negotiations in Seattle later this year is an opportunity to make further progress in this direction. Indeed, we encouraged the IMF to work with the World Bank and World Trade Organization to strengthen the programs of work to achieve better global policy making.

We have adopted as part of our reforms of the international financial architecture today the new code on monetary and financial policies, and we are urging all members to implement this code as well as the previously agreed code on fiscal transparency. We have discussed the efforts to involve the private sector in crisis resolution, and we welcomed the progress achieved in securing the involvement of the private sector in individual cases, and are going to continue to do further work to see if agreed principles can be found. We can also say today that as part of the changes in the financial architecture, the Interim Committee has new been put on a permanent basis and now will be called the International Monetary and Financial Committee.

I believe that the joint meeting this morning made progress in three very important areas: first in the reforms to deliver faster, deeper, and wider debt relief; secondly, strengthening the focus on poverty reduction; and thirdly, agreeing progress in the financing arrangements that will allow the enhanced HIPC Initiative to start after these Annual Meetings without having to wait months or years.

I am grateful personally, as was the whole committee, to the work of Michel Camdessus and the work of James Wolfensohn in making possible the progress that we have made today. Every member who spoke was unanimous in their thanks and gratitude to both Mr. Camdessus and Mr. Wolfensohn for the achievements of these last few months.

We endorsed the enhancement to the HIPC Initiative for those countries committed to change. We stressed the need to ensure that debt relief will result in poverty reduction. We endorsed the new framework for anti-poverty and growth strategies that has been proposed by the Bank and the Fund. We believe that there will be very big progress now made in the joint cooperation to achieve growth-related poverty reduction programs for the poorest countries. We stressed the need to put in place macroeconomic, structural, and social policies that will generate growth and contribute to long-term poverty reduction.

On the financing of the HIPC Initiative, and now the enhanced HIPC Initiative, the Interim Committee today has endorsed the decision of the Fund for off-market transactions of up to 14 million ounces of gold to allow the IMF to fund their contribution to the enhanced framework. We have urged for the speedy implementation of the enhanced initiative so that as many countries as possible would qualify for assistance under the initiative by the year 2000. The Interim Committee and the Development Committee have also heard of the work that is being done to fund the African Development Bank, the Inter-American Development Bank and, of course, the World Bank itself in meeting its commitments to the HIPC Initiative.

We heard from James Wolfensohn this morning about the proposals that he had, and, subsequently to that, the World Bank HIPC Trust Fund has seen additional sums of money deposited in it by member countries, and that is an addition to announcements made by the United States of America, by Germany, by the European Development Fund over the last few days. We now have and will see implemented a credible initiative so that debt relief can be produced for the countries who need it, not, as I said, in years or in months, but can begin now.

Let it be said of this historic meeting that those to whom the world's greatest wealth has been given have joined with those burdened down by the world's greatest debt and destitution, to form today a new and worldwide alliance against poverty so that in the new century all peoples in all countries will have a chance to build a better future. I believe we have made not only significant progress today, but taken decisive action which will enable the debt relief that we have proposed over the last year now to be financed and to happen. I will be very happy to answer any questions later.

A QUESTIONER: Two-part, on the debt. What is the size of the shortfall of pledges to the Trust Fund for the full implementation of the enhanced HIPC for the first 12 months and beyond? Secondly, in the last couple of days, we have seen reports in the Financial Times about how policy-based lending from the Bank has not lived up to it own guidelines on poverty reduction and environment. On top of that, we have seen about three quarters of ESAF programs going off track. How can we have confidence that the policy framework, even where it is at its best on environment and poverty reduction, will actually work?

MR. BROWN: I will answer what I think is the relevant question for me this afternoon as Chairman of the Interim Committee, and bring you up to date with what has happened on the financing of the initiative as a result of the joint meeting.

As you know, the IMF has made proposals which were accepted by the Interim Committee about how it plans to finance its part of the debt initiative, and the Interim Committee was happy to hear and welcomed the proposals put forward by the IMF. We heard from Mr. Wolfensohn this morning about how he plans to finance his debt relief and how he wants to enhance the HIPC Trust Fund so that it can help not just the World Bank but help the African and other development banks.

Can I say that before last week, $550 million had been pledged to the HIPC Trust Fund. As a result of decisions made by many countries over the last week, since the middle of last week, we had the contribution from America itself. We had announcements about the European Development Fund and their plans to help, particularly in relation to the African Development Bank. Subsequent to that, we have had a number of countries make announcements today about what they will do. Therefore, the funding of the Trust Fund is now rising toward $2.5 billion.

As far as the United Kingdom is concerned, let me just say that we had already put in $171 million into the HIPC Trust Fund. We announced today that we would put an additional $50 million into that Fund. Other countries have made further announcements. I believe by tomorrow afternoon, as we expect, there will be more also to say.

So, the situation has moved very considerably from where it was last week. We are in a far better position than we were in relation to HIPC I. The key question is, can the debt relief start under the enhanced initiative for those countries that are ready and need it now. The answer is yes, that can happen, as the statement from the committee has said today, and I believe we will see further announcements over the course of the next few days.

A QUESTIONER: Two questions, if I may. First, you referred to putting the Interim Committee on a permanent basis. What does this mean actually in terms of the governance of the Fund, if you will, and the policy inputs which individual member governments can make? That is the first question.

Secondly, you referred to progress on involving the private sector in crisis resolution in individual cases. What did you mean by that? What kind of progress has actually been made in that direction?

MR. BROWN: Let me say something here as well, but as far as the Interim Committee, the resolution to transform the Interim Committee into the International Monetary and Financial Committee, it was strengthening its role as the Advisory Committee of the Board of Governors, and I think that should be what I stress there.

As far as the private sector participation is concerned, we have decided that we will look at a number of instances of private sector involvement in crisis resolution and see if there are general rules that we can learn for the future. If I may put it this way, I think the debate has moved over the last year from what I think most people recognize as ad hoc responses that individual countries and institutions had to make to situations in individual countries, to a situation where while we recognize that there is no one-size-fits-all approach that can be taken here, we can however have a more orderly process perhaps based on general principles and a general framework that people accept. That is where the debate has now moved. I believe and I think Michel would agree that is considerable progress over the course of the year.

MR. CAMDESSUS: Mr. Chairman, I totally confirm what you have said. At this stage, I think we cannot tell you much more; you will have our progress report. It is on the basis of this progress report that we will continue working. We are gaining experience by the day in this domain, and now we will try from this experience to extract principles and possibly define instruments for action. We need a little bit more time. But certainly, by the time of the April session, we will have further steps accomplished.

I would like, if I may, Mr. Chairman, to add one word to your answer to this gentleman earlier, as he was telling us that it was difficult not to be skeptical about the success of what we are trying to do as the success of our programs in the past has not been that convincing, at least for him.

I would like to call your attention to the kind of referendum we had on our efforts to introduce the fight against poverty into our programs. I would like to give you the results of the referendum. We asked our membership, 182 members, the big majority of them developing countries, to contribute their money for our contribution to HIPC and our contribution to make permanent the new instrument which will be the successor of ESAF. The results of the referendum are the following.

Eighty-seven countries have accepted to put their money there in proportion, in general, to their quota shares in the IMF capital basis. Among these 87 countries, you will find 54 developing countries and 10 countries in transition. Among them, interestingly enough, you have countries which had been supported by ESAF programs or countries which are currently under programs of this kind, but who consider that these programs are so good for them that they accept to pledge some of their money for allowing other countries to benefit from this kind of thing.

And I could give you names of countries which are ESAF-eligible and had ESAFs so far who have done that. You will see that these are not the better of the world; you have Azerbaijan, Bangladesh contributing to it, Cambodia, Ghana, Sri Lanka. It shows you that these countries who have experienced this kind of IMF-World Bank therapies, found it good for themselves and for the others.

MR. DAWSON: Unfortunately, the Chancellor has to leave, so this will have to be the last question.

A QUESTIONER: Mr. Brown, you mentioned the U.K. contribution that had been announced today. Could you walk us through other contributions that have come in, say, in the last 24 hours?

MR. BROWN: I am not in a position to make announcements for individual countries. What I can say is that cumulatively, if these pledges are met, this is how the figure adds up. But I think you will find that individual countries are making their own announcements today and tomorrow. What I can say to you is that these are significant sums of additional money, money that had not been pledged, in some cases money that has now been brought forward when there was no plan to do so, as a result of us looking at what needs to be done and people being prepared to play their part.

I can also say it is not just one or two countries; it is many countries who have decided that this is the opportunity that we have to make a decisive break with the past, to move the HIPC Initiative forward to a new enhanced initiative, and to release the funds that are necessary for the multilateral institutions to play their part. So, you will be talking about announcements that will be coming from a number of countries over the next day. As I say, if these pledges are met, it adds up to a very significant sum of money and allows to us say with confidence that we can move forward to allow individual countries to benefit from the enhanced initiative immediately.

But I think I would emphasize Michel Camdessus's point. What we are talking about today was how we could build a virtuous circle, a virtuous circle of relief, poverty reduction, and economic development. The new proposals from both the IMF and the Bank to work together on the anti-poverty and growth strategies are a very important part of this process. I think people will look back at this meeting and see not only the decisions on debt relief which are historic as we approach the millennium, but also the decisions to set up these new initiatives, the anti-poverty and growth programs, as marking a very important step forward, which will mean a great deal of improvement and hope in countries hit by economic circumstances that are unfavorable and hit by poverty.

Can I explain that I have got to leave because I have got to speak to my Labour Party conference tomorrow morning and I must get the last plane, so I do apologize. I will be happy to give any further interviews at Heathrow Airport in London.

[6:19 p.m. END]


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