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Annex 1
Active IMF Lending Arrangements—As of December 31, 2005


Member Date of arrangement Expiration date Amount approved Undrawn balance

  (in SDR millions)
Stand-By Arrangements—Total   18,659 12,491  
Argentina September 20, 2003 September 19, 2006 8,981 4,810
Bolivia April 2, 2003 March 31, 2006 146 34
Bulgaria August 6, 2004 September 5, 2006 100 100
Colombia May 2, 2005 November 2, 2006 405 405
Croatia, Republic of August 4, 2004 April 3, 2006 97 97
Dominican Republic January 31, 2005 May 31, 2007 438 289
Iraq December 23, 2005 March 22, 2007 475 475
Macedonia, FYR August 31, 2005 August 30, 2008 52 41
Peru June 9, 2004 August 16, 2006 287 287
Romania July 7, 2004 July 6, 2006 250 250
Turkey May 11, 2005 May 10, 2008 6,662 4,997
Uruguay June 8, 2005 June 7, 2008 766 705
         
Extended Fund Facility Arrangements—Total 794 186
Serbia and Montenegro May 14, 2002 February 28, 2006 650 62
Sri Lanka April 18, 2003 April 17, 2006 144 124

Annex 1
Active IMF Lending Arrangements—As of December 31, 2005
(cont’d)


Member Date of arrangement Expiration date Amount approved Undrawn balance

  (in SDR millions)
Poverty Reduction and Growth Facility Arrangements—Total 2,702 1,144
Armenia May 25, 2005 May 24, 2008 23 16
Bangladesh June 20, 2003 June 19, 2006 400 185
Benin August 5, 2005 August 4, 2008 6 5
Burkina Faso June 11, 2003 August 15, 2006 24 7
Burundi January 23, 2004 January 22, 2007 69 29
Cameroon October 24, 2005 October 23, 2008 19 16
Chad February 16, 2005 February 15, 2008 25 21
Congo, Republic of December 6, 2004 December 5, 2007 55 39
         
Congo, Democratic Republic of June 12, 2002 March 31, 2006 580 27
Dominica December 29, 2003 December 28, 2006 8 2
Georgia June 4, 2004 June 3, 2007 98 56
Ghana May 9, 2003 October 31, 2006 185 79
Guyana September 20, 2002 September 12, 2006 55 19
Honduras February 27, 2004 February 26, 2007 71 41
Kenya November 21, 2003 November 20, 2006 225 150
Kyrgyz Republic March 15, 2005 March 14, 2008 9 6
Malawi August 5, 2005 August 4, 2008 38 33
Mali June 23, 2004 June 22, 2007 9 7
Mozambique July 6, 2004 July 5, 2007 11 6
Nepal November 19, 2003 November 18, 2006 50 36
Nicaragua December 13, 2002 December 12, 2005 98 36
Niger January 31, 2005 January 30, 2008 26 15
Rwanda August 12, 2002 February 11, 2006 4 1
         
São Tomé and Principe August 1, 2005 July 31, 2008 3 3
Senegal April 28, 2003 April 27, 2006 24 14
Sri Lanka April 18, 2003 April 17, 2006 269 231
Tajikistan December 11, 2002 February 10, 2006 65 10
Tanzania August 16, 2003 August 15, 2006 20 6
Uganda September 13, 2002 December 31, 2005 14 2
Zambia June 16, 2004 June 15, 2007 220 44
Total     21,679 14,455

 

Annex 2
Projects Approved for IBRD and IDA Assistance in Fiscal Year 2005,
by Country (July 1, 2004–June 30, 2005)


IBRD loans IDA loans Total loans
 


  Amount Amount No. Amount

  (in millions of US dollars)
Borrower or Guarantor        
Afghanistan 285.0 6 285.0
Africa Region 152.0 4 152.0
Albania 61.5 4 61.5
Angola 71.7 2 71.7
Argentina 480.0 3 480.0
Armenia 40.0 2 40.0
Azerbaijan 48.0 51.8 5 99.8
Bangladesh 600.0 3 600.0
Benin 125.0 3 125.0
Bhutan 7.0 1 7.0
Bolivia 43.4 2 43.4
Bosnia and Herzegovina 57.0 3 57.0
Brazil 1,771.8 8 1,771.8
Bulgaria 150.0 1 150.0
Burkina Faso 135.6 3 135.6
Burundi 35.0 1 35.0
Cambodia 38.0 2 38.0
Cameroon 18.2 1 18.2
Cape Verde 30.0 2 30.0
Central America Region 8.0 1 8.0
Central Asia Region 25.0 1 25.0
Chad 48.0 2 48.0
Chile 50.3 1 50.3
China 1,030.0 9 1,030.0
Colombia 912.0 8 912.0
Congo, Democratic Republic of 142.0 2 142.0
Congo, Republic of 50.0 2 50.0
Costa Rica 30.0 1 30.0
Croatia 85.7 2 85.7
Djibouti 6.5 1 6.5
Dominican Republic 150.0 1 150.0
Ecuador 100.0 1 100.0
Egypt, Arab Republic of 140.0 2 140.0
El Salvador 145.2 3 145.2
Eritrea 74.0 2 74.0
Ethiopia 449.9 6 449.9
Gambia 4.0 4.0
Georgia 23.0 1 23.0
Ghana 314.0 4 314.0
Grenada 5.0 5.0 1 10.0
Guinea 55.3 2 55.3
Guinea-Bissau 7.0 1 7.0
Haiti 75.0 3 75.0
Honduras 92.0 2 92.0

Annex 2
Projects Approved for IBRD and IDA Assistance in Fiscal Year 2005,
by Country (July 1, 2004–June 30, 2005)
(cont’d)


  IBRD loans IDA loans Total loans
 


  Amount Amount No. Amount

  (in millions of US dollars)
India 1,748.5 1,137.8 11 2,886.3
Indonesia 680.8 236.4 8 917.2
Iran, Islamic Republic of 564.0 3 564.0
Jordan 15.0 1 15.0
Kazakhstan, Republic of 59.0 2 59.0
Kenya 120.0 3 120.0
Kosovo 15.0 3 15.0
Kyrgyz Republic 38.1 3 38.1
Lao People’s Democratic Republic 76.0 3 76.0
Lesotho 19.1 2 19.1
Macedonia, Former Yugoslav Republic of 25.3 2 25.3
Madagascar 193.0 1 193.0
Malawi 47.2 2 47.2
Maldives 29.6 2 29.6
Mali 80.0 2 80.0
Mauritania 54.0 2 54.0
Mexico 587.8 4 587.8
Moldova 11.5 1 11.5
Mongolia 18.3 2 18.3
Morocco 330.0 3 330.0
Mozambique 170.0 2 170.0
Nepal 135.0 4 135.0
Nicaragua 26.0 2 26.0
Niger 40.0 1 40.0
Nigeria 329.8 3 329.8
Organisation of Eastern Caribbean States 1.4 1.4 1 2.7
Pakistan 347.4 500.0 4 847.4
Paraguay 28.2 3 28.2
Peru 456.8 7 456.8
Philippines 99.0 3 99.0
Poland 230.5 2 230.5
Romania 786.0 7 786.0
Russian Federation 205.0 2 205.0
Rwanda 110.0 3 110.0
São Tomé and Principe 5.0 1 5.0
Senegal 112.8 5 112.8
Serbia and Montenegro 114.0 5 114.0
Sierra Leone 103.7 3 103.7
Slovak Republic 6.5 1 6.5
Sri Lanka 203.0 3 203.0
Saint Lucia 7.1 7.1 2 14.2
Saint Vincent and the Grenadines 3.5 3.5 1.0 7.0

Annex 2
Projects Approved for IBRD and IDA Assistance in Fiscal Year 2005,
by Country (July 1, 2004–June 30, 2005)
(cont’d)


  IBRD loans IDA loans Total loans
 


  Amount Amount No. Amount

  (in millions of US dollars)
Tajikistan 28.0 2 28.0
Tanzania 355.5 3 355.5
Timor-Leste 5.0 1 5.0
Tonga 1.0 1 1.0
Tunisia 163.1 2 163.1
Turkey 1,800.1 7 1,800.1
Uganda 327.6 3 327.6
Ukraine 192.6 2 192.6
Uruguay 175.4 3 175.4
Uzbekistan 40.0 1 40.0
Vietnam 698.8 9 698.8
Western Africa Region 40.0 1 40.0
Yemen, Republic of 65.0 1 65.0
Zambia 68.2 2 68.2
Bank-wide total 13,610.8 8,696.1 278 22,307.0

Annex 3
IBRD Loans and IDA Credits—Summary Statistics
Fiscal Year 2005 (July 1, 2004–June 30, 2005)


  IBRD IDA Total
 


  Amount Amount No. Amount

  (in millions of US dollars)
By Area        
Africa 0.0 3887.5 76 3,887.5
East Asia and Pacific 1,809.8 1,073.5 38 2,883.3
Europe and Central Asia 3,588.6 504.9 59 4,093.5
Latin America and the Caribbean 4,904.4 261.3 58 5,165.7
Middle East and North Africa 1,212.1 71.5 13 1,283.6
South Asia 2,095.9 2,897.4 34 4,993.3

Total 13,610.8 8,696.1 278 22,307.0
By Theme        
Economic Management       594.6
Environmental and Natural Resource Management       2,493.8
Financial and Private Sector Development       3,862.0
Human Development       2,951.0
Public Sector Governance       2,636.4
Rule of Law       303.8
Rural Development       2,802.2
Social Development, Gender, Inclusion       1,285.8
Social Protection and Risk Management       2,437.6
Trade and Integration       1,079.9
 
Total       22,307.0

Annex 4
World Bank Procurement from Canada
Disbursements by IBRD and IDA Borrowers:
Goods and Services From Canada—To June 30, 2005


  IBRD IDA Total

  Amount Amount Amount

  (in millions of US dollars)
By Fiscal Year      
1997–98 82.0 32.0 114.0
1998–99 69.0 37.0 106.0
1999–00 73.0 22.0 95.0
2000–01 45.0 15.0 60.0
2001–02 48.0 16.0 64.0
2002–03 41.0 20.0 61.0
2003–04 41.0 30.0 71.0
2004–05* 56.1 35.5 94.6
* As of fiscal year 2005, data reflects goods and service contracts awarded and not payments

IBRD Loans and IDA Credits to Developing Countries


  IBRD IDA Total

  No. Amount No. Amount No. Amount

  (in millions of US dollars)
By Fiscal Year            
1997–98 151 21,086.2 135 7,507.8 286 28,594.0
1998–99 131 22,182.3 145 6,811.8 276 28,994.1
1999–00 97 10,918.6 126 4,357.6 223 15,276.2
2000–01 91 10,487.1 134 6,763.5 225 17,250.6
2001–02 96 11,451.8 133 8,067.6 229 19,519.4
2002–03 99 11,230.7 141 7,282.5 240 18,513.0
2003–04 87 11,045.4 158 9,034.6 245 20,080.1
2004–05 118 13,610.8 160 8,696.1 278 22,307.0

Note: Joint IBRD/IDA operations are counted once as IBRD operations. When more than one loan is made for a single project, the operation is counted only once.

Annex 5

Communiqués of the International Monetary and Financial Committee of the Board of Governors of the IMF

Washington, D.C.
April 16, 2005

1. The International Monetary and Financial Committee held its eleventh meeting in Washington, D.C. on April 16, 2005 under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom.

The Global Economy and Financial Markets—
Outlook, Risks, and Policy Responses

2. The Committee welcomes the continuing global economic expansion, underpinned by supportive macroeconomic policies, improving corporate balance sheets, and benign financial market conditions. While returning to a more sustainable pace, global growth will likely remain robust in 2005. The Committee notes, however, that widening imbalances across regions and the continued rise in oil prices and oil market volatility have increased risks. The potential for a sharper-than-expected rise in long-term interest rates from their very low levels and for increased exchange rate volatility also calls for vigilance. The Committee emphasizes that in the coming months IMF surveillance should focus on promoting policies for reducing global imbalances over time; addressing the impact of higher oil prices, in particular on the most vulnerable countries; managing the policy response to potential inflationary pressures; and ensuring the sustainability of medium-term fiscal frameworks.

3. The Committee reiterates that all countries have a shared responsibility to take advantage of the current favorable economic conditions to address key risks and vulnerabilities. To ensure orderly adjustment of global imbalances and to help achieve more sustainable external positions and stronger medium-term growth, the Committee calls for concrete actions by all to implement the agreed policy response in a timely and effective manner. This includes fiscal consolidation to increase national savings in the United States; greater exchange rate flexibility as appropriate, supported by continued financial sector reform, in emerging Asia; further structural reforms to boost growth and domestic demand in Europe; and further structural reforms, including fiscal consolidation, in Japan.

4. The Committee notes that conditions in the oil market will remain tight in the medium term, reflecting strong global demand, low excess capacity, and supply concerns even after investments in some countries. It underscores the importance of stability in oil markets for global prosperity, and recognizes the impact of higher oil prices especially on poorer communities. In this context, the Committee calls for efforts to remove disincentives to investment in oil production and refining capacity, and to promote energy sustainability and efficiency, including through new technologies and removing barriers to the development of alternative fuels. It encourages closer dialogue between oil exporters and importers, and further efforts to improve oil market data and transparency.

5. Inflation remains relatively subdued in most countries, reflecting in part greater credibility of monetary policy. However, with inflationary pressures likely to increase as the expansion matures, a smooth transition to more neutral interest rates remains a priority in many countries, although the appropriate timing and pace will vary, depending on countries’ cyclical positions. In countries receiving strong capital inflows, exchange rate flexibility would facilitate monetary management.

6. Steps to strengthen fiscal positions within sound frameworks and address structural weaknesses will also be critical for supporting medium-term growth and macroeconomic stability, and meeting demographic challenges. Fiscal deficits remain high in many industrial countries and should be reduced. In emerging markets, fiscal indicators have generally improved, but in countries with high levels of public debt continued efforts will be needed to reduce them to more sustainable levels. In both industrial and developing economies, structural reforms need to be advanced to remove rigidities and ensure sustainable growth. The Committee welcomes Argentina’s rapid recovery. The recent debt exchange offer represents an important step toward the long-term goal of sustainable growth. Argentina will now need to formulate a forward-looking strategy to resolve the remaining arrears outstanding to private creditors consistent with the IMF’s lending into arrears policy, and to continue with necessary structural reforms.

7. Poverty reduction must remain at the top of the international agenda. The Committee welcomes the strong growth performance across developing countries, particularly in sub- Saharan Africa, but notes with concern that most of them are at risk of falling well short of the Millennium Development Goals (MDGs).[1] With improved macroeconomic stability in most countries, the key challenge remains to press ahead with reforms to strengthen the investment environment and foster private sector-led growth. The global community, in turn, needs to support these reform efforts through meeting commitments to increased and better coordinated financial and technical assistance, further debt relief, policies to improve remittance flows, and improved market access for developing countries.

8. The Committee emphasizes that successful and ambitious multilateral trade liberalization is central to sustained global growth and economic development. The immediate priority is for WTO members to translate the mid-2004 framework agreements into a viable policy package in time for the December 2005 WTO Ministerial Conference. The Committee encourages Doha participants to aim for ambitious and comprehensive results, notably in agriculture; substantial reductions in barriers to other trade, including liberalization in financial and other services; and strengthened multilateral trade rules. The Committee supports the IMF’s continued role in advocating trade liberalization and assisting members to benefit from it. It encourages the IMF to work with other partners in the Integrated Framework to explore further ways of easing adjustment to trade liberalization, including through the Trade Integration Mechanism, and building capacity in low-income countries. The Committee looks forward to consideration of proposals at its next meeting.

Shaping the IMF’s Strategic Direction

9. The Committee welcomes the discussions underway on the IMF’s medium-term strategy, and looks forward to reaching conclusions by the 2005 Annual Meetings and further reflection on longer-term issues. The Committee agrees that the central elements of the IMF’s mandate as set out in its Articles of Agreement remain as important as ever. The challenge is to enhance the IMF’s effectiveness in pursuing its core objectives, while continuing to adapt to changing global economic circumstances. This would ensure that the IMF remains relevant for all its members, which would further foster the coherence, credibility, and evenhandedness of the IMF.

10. The Committee calls for further work on the following emerging priorities that will help shape the institution’s strategic direction:

IMF Support for Low-Income Members’ Efforts Toward Poverty Reduction and Strong, Sustainable Growth

11. The Committee underscores the conclusion of this year’s Global Monitoring Report that bold actions are urgently needed by the developing countries and their partners to realize the MDGs. The U.N. Summit in September 2005 will mark an important milestone to review progress and lay out actions going forward. The IMF has a critical role in supporting—through policy advice, capacity building, and financial assistance, including debt relief—low-income countries’ efforts to achieve macroeconomic stability, debt sustainability, and strong, sustainable high growth needed to make progress toward the MDGs.

12. Work is underway to refine the operational aspects of the Poverty Reduction Strategy (PRS) approach, improve the design of PRGF-supported programs, and enhance PRGF-PRS alignment. This will be underpinned by more extensive analyses of the sources of and obstacles to growth, and of the linkages between growth and poverty reduction. The Committee looks forward to further work to ensure adequate financing of the PRGF to meet future demands as assessed by the IMF, and other IMF instruments to assist low-income countries, including to help members deal with shocks. It also looks forward to further work on a policy monitoring arrangement to enhance the IMF’s signaling role for countries that do not need or want IMF financing.

13. The Committee supports work by the IMF and World Bank on aid effectiveness and financing modalities. On innovative sources of development financing, such as the International Finance Facility (IFF) and its pilot—the IFF for immunization—global taxes which could also refinance the IFF, the Millennium Challenge Account, and other financing measures, it welcomes the joint IMF and World Bank note outlining progress that has been made. The Committee asks to be kept informed of the further work ahead of the U.N. Summit.

14. The Committee notes the recent progress in providing debt relief under the HIPC Initiative. It encourages countries to take the necessary actions to benefit from the Initiative, and urges full creditor participation. The Committee supports the joint IMF-World Bank framework to assist low-income countries’ efforts to achieve and maintain debt sustainability while pursuing their development objectives, and a review of experience under the framework.

15. The Committee welcomes the IMF’s work and the preliminary discussion of key issues regarding proposals for further multilateral debt relief and its financing options, and calls for further discussion with shareholders and examination of these issues, including the possible use of the IMF’s resources, by the time of its next meeting. It notes that any possible further debt relief from the IMF should be part of a wider international effort.

Other Issues

16. The Committee welcomes progress toward meeting the objectives of IMF surveillance identified at its last meeting, including in the areas of exchange rate issues, financial sector surveillance, better integrating debt sustainability analysis and regional and global spillovers into country surveillance, and balance sheet vulnerabilities. It also welcomes the Africa Regional Economic Outlook. The Committee looks forward to the upcoming review of the Standards and Codes Initiative to assess its effectiveness in informing surveillance, enhancing crisis prevention, and strengthening countries’ institutions.

17. The Committee welcomes the increased adoption of collective action clauses in international sovereign bonds, and calls on the IMF to continue to promote progress in this area. It notes the "Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets" being developed by a number of sovereign issuers and the investor community, and encourages further efforts to improve the Principles aimed at achieving a broad consensus. The Committee looks forward to further work on the orderly resolution of financial crises, including the implementation of the IMF’s lending into arrears policy.

18. The Committee takes note of the recent review of IMF conditionality, including the design of IMF-supported programs. Progress has been made in streamlining conditionality and fostering national ownership. The Committee encourages the IMF to incorporate the findings of the review into its operational work, and to deepen further its analysis of key elements of program design.

19. The Committee recommends completion of the ratification of the Fourth Amendment.

20. The Committee wishes to thank James Wolfensohn for his great contribution as President of the World Bank. During his time at the helm of the Bank, great strides have been made in cooperation and partnership between the IMF and the World Bank, and in progress toward realizing our dream of a world free of poverty.

21. It is expected that the next meeting of the IMFC will be held in Washington, D.C. on September 23, 2005.

Washington, D.C.
September 24, 2005

1. The International Monetary and Financial Committee held its twelfth meeting in Washington, D.C. on September 24, 2005 under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom.

The Global Economy and Financial Markets—
Outlook, Risks, and Policy Responses

2. The Committee welcomes the ongoing global economic expansion, although it notes that growth divergences between countries remain wide. Global growth is expected to continue, although downside risks to the outlook have increased, especially high and volatile oil prices, recently exacerbated by the effects of Hurricane Katrina, the widening of global imbalances, increasing protectionist sentiment, and the possibility of tighter financial market conditions. While core inflation generally is contained and inflation expectations remain well anchored, higher oil prices remain a risk to price stability. The Committee notes that these areas should be a particular focus of IMF surveillance and policy advice in the coming months.

3. The Committee emphasizes that oil producers, oil consumers, and oil companies will all have their part to play in working together to promote greater stability in the oil market. First, the Committee welcomes the action by members of the International Energy Agency and oil-producing countries to continue to increase supplies to the market. Second, the Committee calls for further investment both now and in the long term throughout the supply chain, particularly in refining capacity including of heavy oil, and for efforts to create a favorable investment climate. Third, the Committee also stresses the importance of policies to promote energy conservation, efficiency, and sustainability, including through new technologies, alternative sources of energy, and reducing subsidies on oil products. Fourth, the Committee encourages closer dialogue between oil producers and consumers, and further efforts to improve oil market data and transparency to improve market efficiency. Fifth, the IMF should stand ready to provide assistance to help members, especially poor countries, deal with oil price shocks.

4. The Committee welcomes recent progress in implementing the agreed policies to address global imbalances and foster growth, but urges further action to promote orderly adjustment in view of the heightened risks to the outlook. This includes: fiscal consolidation to increase national savings in the United States; greater exchange rate flexibility in emerging Asia; further structural reforms to boost potential growth in the euro area; and further structural reforms, including fiscal consolidation, in Japan, where the economy is regaining momentum. Measures to promote a more investor-friendly environment, including in a number of emerging market economies, would also contribute to reducing imbalances. Oil-exporting countries will also need to play their part, including through efficient absorption of higher oil revenues in countries with strong macroeconomic policies.

5. Steps to strengthen medium-term fiscal positions remain crucial for supporting global growth and stability. Fiscal deficits in many industrial countries need to be lowered further, and reforms to address pressures from aging populations and ensure the sustainability of pension and health care systems need to be accelerated. Improvements in the fiscal positions and debt structures of many emerging market countries are welcome, but in countries with high public debt levels continued fiscal consolidation efforts are needed. The Committee also calls for more ambitious efforts to address rigidities in labor and product markets in many countries. Regulatory and supervisory authorities should remain alert to risks stemming from ample global liquidity and associated risk taking and leverage.

6. The Committee emphasizes that a successful outcome to the Doha Round by the end of 2006 remains of critical importance for global growth and poverty reduction. Serious challenges remain in reaching agreement at the WTO ministerial meeting in Hong Kong SAR in December. As finance ministers and central bank governors of WTO member countries, we have a vital interest in successful multilateral trade liberalization. Benefiting from a useful exchange of views with Mr. Pascal Lamy, the Director-General of the WTO, the Committee calls on all countries to ensure progress on ambitious trade liberalization with the urgency that the timetable now demands. Key areas for action are: increasing market access, especially for developing countries; significantly reducing trade distorting domestic support; eliminating all forms of export subsidies in agriculture; and making significant progress on services, including financial services, and on issues of intellectual property. The Committee welcomes the joint IMF-World Bank staff report on proposals to enable low-income countries to benefit fully from trade liberalization, and urges the Executive Board to consider these proposals expeditiously.

7. The Committee welcomes the enhanced growth performance and prospects of many of the world’s poorest countries, reflecting improvements in their underlying policies. With ten years remaining to meet the Millennium Development Goals (MDGs),[2] those countries should move rapidly to strengthen policies needed for sustainable growth and poverty reduction, including through sound macroeconomic frameworks and building the sound, accountable, and transparent institutions that are essential for fostering growth and supporting vibrant private sector growth. Also, the international community must follow through expeditiously on its renewed commitments to provide additional resources, including at the Gleneagles Summit and the Millennium Review Summit. An ambitious outcome to the Doha Round is also essential for poverty reduction.

IMF Objectives and Medium-Term Strategy

8. The Committee welcomes and supports the broad priorities set forth in the Managing Director’s Report on the Fund’s Medium-Term Strategy to improve the IMF’s effectiveness in support of its members. In the coming years the IMF will continue to work to help members meet the economic challenges of globalization within its mandate in the macroeconomic and financial areas. The Committee looks forward to specific proposals and timelines on the main tasks identified in the medium-term strategy in the Executive Board’s work program, within the context of the IMF’s medium-term budget framework and the staff compensation review.

9. The broad priorities set out in the Managing Director’s report[3] are to:

The Committee agrees that the IMF needs to deepen its analysis of globalization and continue to develop its strategy for responding to the long-term challenges it poses.

Strengthening IMF Support for Low-Income Countries—
Instruments; Financing; and Debt Relief

10. The Committee reiterates that the IMF has a critical role in supporting low-income countries through policy advice, capacity building, and financial assistance. The PRGF remains the main instrument for IMF financial support for low-income country members. The Committee agrees that the IMF’s concessional lending should be financed at an appropriate level as assessed by the IMF. The Committee calls for incorporation of the lessons from the recent review of the design of PRGF-supported programs in the future work of the IMF in low-income countries.

11. The Committee welcomes the progress made on new instruments that will strengthen IMF support for low-income countries. The Policy Support Instrument (PSI) will be available to members that do not need, or want, IMF financial assistance, but voluntarily request IMF endorsement and continued assessment of their policies as meeting the standard of upper credit tranche conditionality. The country-owned policy frameworks designed by the authorities would consolidate medium-term macroeconomic and financial stability, and deepen reforms in support of poverty reduction and economic growth. A new window in the PRGF Trust will also be available to complement existing instruments by providing timely concessional support to low-income members without a regular PRGF arrangement and who are facing exogenous shocks, and we look forward to contributions from countries.

12. The Committee supports the proposal to provide 100 percent cancellation of debts owed by Heavily Indebted Poor Countries (HIPCs) to the IMF, the International Development Association and the African Development Fund. This will provide significant additional resources for countries’ efforts to reach the MDGs and reinforce longer-term debt sustainability. The Committee welcomes the approach subsequently discussed in the IMF to ensure that the IMF’s resources will be used consistently with the principle of uniformity of treatment. It stresses the importance of ensuring that the IMF’s capacity to provide financing to low-income countries is maintained, and therefore welcomes G-8 countries’ commitments to provide additional resources. It also emphasizes that countries benefiting from irrevocable debt relief should have demonstrated sound policies and high standards of governance. Following this agreement now reached on all the elements, the Managing Director has informed the Committee that he will now call the Executive Board together to complete its approval of the arrangements to deliver debt relief by the end of 2005. The implications of debt cancellation for the new debt sustainability framework should be addressed in the review scheduled for Spring 2006. There should be a regular report on progress at future meetings of the Committee.

13. The Committee underscores the importance of full creditor participation, including by non-Paris Club creditors and private creditors, in contributing their share to implementing the enhanced HIPC initiative. It takes note of the work on identifying low-income countries with unsustainable debts as of end-2004, with a view to finalization by early 2006 of the list of countries potentially eligible for HIPC assistance.

14. The year 2005 is the International Year of Microcredit. The Committee notes the IMF’s role in improving data availability on microcredit and in addressing microcredit issues in the Financial Sector Assessment Program.

Other Issues

15. The Committee welcomes the rapid progress on the inclusion of collective action clauses in international sovereign bonds, and the efforts by emerging market issuers and private sector creditors to broaden the consensus on the "Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets." The Committee looks forward to further work on the orderly resolution of financial crises, including the implementation of the IMF’s lending into arrears policy.

16. The Committee calls for continued actions by all countries to develop strong programs on anti-money laundering and combating the financing of terrorism (AML/CFT). The Committee supports the IMF’s efforts to implement its intensified AML/CFT work program, and notes the critical importance of supporting countries’ efforts with well-targeted and coordinated technical assistance.

17. The Committee recommends members’ acceptance of the Fourth Amendment of the Articles of Agreement. The Committee reiterates that the IMF’s effectiveness and credibility as a cooperative institution must be safeguarded and further enhanced. Adequate voice and participation by all members should be assured, and the distribution of quotas should reflect developments in the world economy. The Thirteenth General Review of Quotas presents an opportunity to address the issue, and we look forward to progress on this issue and a report back at our next meeting.

18. The Committee looks forward to continued high-quality reports by the Independent Evaluation Office (IEO) under the leadership of its new Director, Thomas Bernes, and to the upcoming external evaluation of the IEO.

19. The Committee paid tribute to Alan Greenspan, in his last meeting of the IMFC, for his outstanding leadership of the Federal Reserve and his unprecedented and much valued contribution to the Committee’s work over the last eighteen years.

20. The next meeting of the IMFC will be held in Washington, D.C. on April 22, 2006.

Annex 6

Communiqués of the Development Committee of the Boards of Governors of the World Bank and IMF

Washington, D.C.
April 17, 2005

1. As we approach the fifth anniversary of the U.N. Millennium Declaration, we met to review progress towards the MDGs[4], based on an assessment in the second annual Global Monitoring Report. We reaffirmed our strong support for the strategies and decisions agreed in Doha, Monterrey and Johannesburg which set out a framework for fighting poverty and achieving the internationally agreed goals. We welcome the continued active involvement of the Bank and the Fund in the preparations for and the proceedings at the UNGA Special Session on Financing for Development, as well as the UN High-Level Millennium Review in New York in September.

2. We welcomed the progress achieved, on actions both by developing and developed countries. These actions have contributed to the strongest global economic growth in over three decades. However, overall progress has been uneven and slower than envisaged. Without tangible action to accelerate efforts, the vision of the Millennium Declaration will not be realized. At stake are prospects not only for hundreds of millions of people to escape poverty, disease, illiteracy, and gender inequality but also for long-term global security and peace, which are intimately linked to development.

3. All regions face significant challenges, but we welcomed the Report’s focus on sub-Saharan Africa as the region farthest from achieving the MDGs. We also welcomed the recent Report of the Commission for Africa. We are encouraged that real growth in sub-Saharan Africa increased in 2004 to an eight-year high of 5 percent and inflation has fallen to an historical low. The challenge is to accelerate and sustain growth and development through sound policy frameworks .We welcomed the IFC’s Strategic Initiative for Africa, including the recently approved Private Enterprise Partnership Facility. We call upon the Bank to undertake further analytical and institutional work, together with partners, to develop an ambitious action plan for Africa for consideration by our next meeting.

4. Many developing countries are taking actions to strengthen policies and institutions which not only provide benefits but also valuable experience for others. We endorsed the emphasis on country-led and owned development strategies and urged that MDGs be operationalized in poverty reduction strategies, linked to medium term budgetary frameworks. Macroeconomic stability remains critical, as is the need to strengthen public sector financial management, promote good governance including combating corruption and promoting the rule of law, improve business climate and regulation and develop local financial markets, so as to enable private sector led economic growth. Environmental sustainability remains critical and should also be addressed in domestic policies and programs, as well as through international action. We recognize the importance of all countries integrating climate concerns into their policy planning.

5. A major scaling up of education (in particular through the Education For All Fast Track Initiative), health and basic infrastructure services, including water and sanitation, is fundamental to meeting key development goals. We noted with concern the failure to meet the target date for achieving gender parity in primary and secondary education. We called upon bilateral donors and multilateral agencies to provide timely, predictable and sustained financing to support these efforts. We reconfirmed the importance of efforts to help developing countries build capacity and address absorptive capacity constraints.

6. We have in the past highlighted the critical importance of scaling up infrastructure investment in developing countries as a means of promoting economic growth and achieving the MDGs, and have endorsed the Infrastructure Action Plan of the World Bank. With a view to removing such impediments as may exist in enabling the Bank to scale up the infrastructure work, we look forward to reviewing implementation of the Action Plan at our next meeting, including the results of the ongoing work of the IMF and Bank on how to increase fiscal space for growth.

7. To complement these actions, developed countries must meet their commitments to help accelerate progress. We underlined the vital importance of an ambitious outcome for the Doha Development Agenda and the successful completion of the negotiations in 2006. Improving trade opportunities and market access for agriculture, industrial products and services will be critical. We stressed the need for "aid for trade" and we call on the Bank and Fund to work with others to develop proposals to help developing countries adjust to and take advantage of the round, for consideration by our next meeting. We also recognized the benefits to developing countries from reducing developing country trade barriers and of strengthening South-South trade.

8. Financing the development agenda remains a significant challenge, requiring sustained action on domestic resource mobilization, private investment and trade. We welcomed the Bank’s work program to improve analysis and statistics on remittances, labor mobility and migration, and to address impediments to remittance flows. We emphasized that a significant increase in aid will also be needed for accelerated progress towards the MDGs. We welcomed the successful conclusion of the IDA 14 replenishment as an important step in mobilizing additional resources and called on donors to finalize their commitments. We noted the further work on the impact of exogenous shocks on low-income countries and small vulnerable states and we look forward to further proposals in the context of the IDA14 mid-term review on what options are available to operationalize these proposals.

9. We also welcomed the agreement by the Bank and Fund on a joint forward-looking framework for assessing debt sustainability in low-income countries. We welcomed recent proposals for additional debt and debt service relief. We agreed that further debt relief beyond HIPC is needed in specific cases to secure long term debt sustainability and support progress towards the MDGs. We ask the Bank and Fund to examine these proposals for the Annual Meetings.

10. We confirmed our commitment to deliver on the pledges made at and after Monterrey to raise levels of ODA. We urged those donors that have not done so to make concrete efforts towards the target of 0.7 percent of GNI as ODA.

11. We welcomed further work on innovative sources of development financing. We noted that negotiations among interested parties on the proposed pilot IFF for Immunization are well advanced; and the analysis of technical feasibility of the IFF has created the conditions for the necessary political decisions on participation. We encourage interested donors to proceed with these proposals. Potential participants believe that global tax mechanisms to finance development may be feasible and desirable, while other members do not. We noted the analysis of the economic rationale, technical feasibility, and moderate coalition size needed for some of the global tax proposals. Building upon the existing political momentum in some countries, we invite the Bank and the Fund to deepen their analysis of the most promising nationally applied and internationally coordinated taxes for development for the Annual Meetings, as an input into the consideration of a pilot case for interested countries.

12. We also underlined the importance of further action by multilateral development partners, including support for the PRS process in low-income countries, aligning assistance better with medium-term country strategies, streamlining conditionality, building institutional capacity and strengthening the focus on development results. We called for further exploration of blending arrangements, for further action to enhance effectiveness and for continued progress in providing innovative and flexible financial products and high quality technical assistance and advisory services better matched to the evolving and diverse needs of middle-income countries; and to strengthen the Bank’s role in these countries, not least with regard to global public goods.

13. We welcomed the Paris Declaration on Aid Effectiveness which responded to our earlier call to make firm commitments on the quality of aid. We note the agreement on quantitative indicators. We urged the establishment of targets, as agreed, for each of the indicators for 2010. Concerted collective actions will be required now to translate these into concrete actions at the country level and we called on the Bank to show leadership by example, in implementing the Paris framework. We welcomed the increasing use of country systems, where appropriate, as a means to enhance harmonization and reduce the cost of doing business.

14. Enhancing voice and participation of developing and transition countries in the Bank and the Fund remains a continuing concern. Progress can only be made through broad consensus at the political level. We noted the further efforts by the Boards in this regard and will return to this issue at our next meeting in the light of progress.

15. We appreciate the efforts of the global community to counter the effects of the deadly tsunamis that wreaked havoc in the Indian Ocean region. The tragedy reminded us that the poorest people tend to be the most vulnerable to natural disasters. We called for a continued focus on the challenge of accelerating the reconstruction and recovery process in the region, restoring livelihoods and on designing projects for disaster preparedness and risk mitigation.

16. A strong and effective multilateral system is essential in the fight against global poverty. We expressed our deep appreciation for the talented leadership of Jim Wolfensohn as he approaches the end of his term at the Bank and wish him success in his new role as Special Envoy for Gaza Disengagement. We also congratulate Paul Wolfowitz on his selection as President and look forward to working with him.

17. The next meeting of the Committee will be held in Washington D.C. on September 24, 2005.

Washington, D.C.
September 25, 2005

1. We met against the background of a series of major meetings in this "Year of Development," in particular the United Nations 2005 World Summit held in New York on September 14-16. These meetings, including the G8 Summit held in Gleneagles in July, have resulted in significant progress in building and deepening consensus on key elements of the development agenda. In our discussions we focused on implementation and priorities for action.

2. We reiterated our support for the realization of the internationally agreed development goals, including the Millennium Development Goals (MDGs), and recognized that this calls for a stronger international development partnership. We are encouraged by commitments to reinvigorate the aid partnership, with stronger policies in many developing countries matched by commitments by developed countries and other donors for significant additional aid and debt relief and steps to improve development effectiveness. We reaffirmed the importance of sound policies, including promoting a strong private sector and improving governance, in developing countries to the achievement of the development goals. In this connection, we emphasized the importance of expanding opportunities for those who have the least voice and the fewest resources and capabilities. We welcomed the increased resources that will become available as a result of the recent establishment of timetables by many donors to achieve the target of 0.7 percent of GNP for ODA. We commended donors who have already reached or exceeded this target. As called for by world leaders at the recent UN Summit, we urged those developed countries that have not yet done so to make concrete efforts in this regard in accordance with their commitments. We noted the launch of the International Finance Facility for immunization and the upcoming implementation of an airline ticket solidarity tax by a group of countries. We called on the Bank to assist with implementation issues, as appropriate, to ensure that these initiatives are coherent with the overall performance- and country-based aid architecture. We also noted ongoing work on blending arrangements and advance market commitments for vaccines.

3. As important as mobilizing more aid is action to improve the quality of aid. We welcomed progress toward establishing tangible indicators and targets for commitments made in the Paris Declaration on Aid Effectiveness. We asked the Bank to work closely with the OECD Development Assistance Committee and other partners to support the delivery and improve the quality of increased assistance, through systematic monitoring and follow-up on aid commitments, and through vigorous implementation of the agreed agenda on managing for results, harmonization, and alignment.

4. We welcomed the World Bank Group’s ambitious Africa Action Plan, which will support African countries in their efforts to increase growth, tackle poverty, and achieve the MDGs. We called for timely and vigorous implementation of the Plan and urged that the Bank work closely with the African Union, New Partnership for Africa’s Development, African Development Bank, African Partnership Forum and other partners. We commended the Plan’s results-oriented approach and the concrete actions it proposes to ensure that increased aid will be used effectively. The Action Plan correctly focuses on building state capacity and improving governance; strengthening the drivers of growth; and promoting broad participation in growth and sharing its benefits. We commended its comprehensive approach toward developing an African private sector, creating jobs, enhancing exports, expanding infrastructure, raising agricultural productivity, strengthening human development, building capacity (including in conflict-affected and fragile states), and increasing regional integration. Related areas we emphasized include strengthening the implementation of Education for All Fast Track Initiative, including closing of the financing gap; stepping up the fight against major diseases including HIV/AIDS and malaria; promoting women’s role in development; and improving the environment for small and medium enterprises, including access to microfinance. We called for further analysis and elaboration of proposed new mechanisms to scale up and strategically target aid to countries and programs with potentially high development impact, which are complementary to and consistent with IDA framework. We also welcomed the Plan’s emphasis on partnerships, monitoring and evaluation, and consultative mechanisms, including reporting back to the Committee on progress on a regular basis in the context of the Global Monitoring Report, starting in 2007.

5. We welcomed the G8 proposal for 100 percent cancellation of debt owed by eligible heavily indebted poor countries (HIPCs) to the International Development Association (IDA), the African Development Fund (AfDF), and the International Monetary Fund, as providing a valuable opportunity to reduce debt and increase resources for achieving the MDGs. In order to expedite the implementation of the proposal, we agreed on the need for an interdependent package consisting especially of dollar for dollar compensation for IDA that is truly additional to existing commitments and that maintains the financial integrity and capacity of IDA to assist poor countries in the future. We are agreed on the need for additionality of donor resources for debt relief to provide tangible benefits to HIPCs. We are confident that the package, including financing, the main technical features of the proposal and burden sharing on a voluntary basis will provide these benefits. We emphasized the importance of maintaining sound economic performance and good governance by eligible countries. We urged donor countries to ensure financing to fully compensate IDA for forgone reflows resulting from debt relief in order to reach a final agreement on the proposal. We welcomed the delivery commitments by the G8 in their letter to the World Bank President. We asked the Bank to prepare a compensation schedule and monitoring system of all donor contributions urgently. On this basis we expressed our support for the aforementioned package and urged the Bank to proceed with the steps to ensure all necessary arrangements for implementation.

6. We also reviewed the implementation of the HIPC Initiative, welcomed continued progress in providing debt relief to HIPCs, noted the need to fill the current funding gap, and urged full creditor participation. We continue to underline the importance of the existing agreement that contributions under the HIPC Initiative be additional to other contributions to IDA. Eighteen countries have reached the completion point and another ten are between decision and completion points. We look forward to a final list of eligible countries in early 2006.

7. Stronger country policies and more and more effective aid must be complemented with ambitious moves to increase openness and market access and to ensure that trade benefits the poor. Without a timely and ambitious outcome for the Doha Development Agenda, developing countries will not achieve the economic growth needed to meet the MDGs. As we approach the crucial Hong Kong Ministerial meeting, which will be an important milestone toward concluding the Doha Round in 2006, now is the time for action by all WTO members to move the negotiations forward, and we called upon developed countries to show leadership. We cannot overemphasize the importance for the global economy and for meeting the MDGs of achieving an outcome that includes: (i) a major reform of agricultural trade policies to expand market access and eliminate trade-distorting subsidies; (ii) action to open markets in manufactures and services; and (iii) increased aid for trade to address supply-side constraints and enhance the capacity of developing countries to take advantage of expanded trade opportunities. We endorsed the proposal for an enhanced Integrated Framework for Trade-related Technical Assistance, including expanding its resources and scope and making it more effective. We asked the Bank and the Fund to examine further the adequacy of existing mechanisms to address regional or cross-country aid for trade needs and explore new mechanisms as appropriate. We supported a strengthened framework for assessing adjustment needs so that IFI and donor assistance mechanisms can be better utilized. We urged the Bank and the Fund to better integrate trade-related needs into their support for country programs. We also asked the Bank and the Fund to continue their global advocacy role on trade and development.

8. Scaling up investment in infrastructure, alongside strong programs for education and health, is key to faster growth and progress in reducing poverty. We welcomed the progress made by the Bank Group in implementing the Infrastructure Action Plan and strengthening public-private partnerships to leverage investment and maximize impact, including in the framework of the newly established Africa Infrastructure Consortium. We called for continued deepening and scaling up of support for infrastructure service delivery, and removal of impediments in this regard, in order to respond to needs in both low- and middle-income countries. As part of this effort, we look forward to a progress report at our next meeting by the Bank on the impact of fiscal space on growth and achievement of the MDGs, in continued cooperation with the Fund on the macroeconomic aspects of this issue.

9. We welcomed the review of World Bank conditionality and endorsed the good practice principles the Bank has put forward to streamline conditionality and strengthen country ownership and leadership. We called for regular monitoring to ensure their consistent implementation at the country level and for a report on progress next year. We also welcomed the work on enhancing IMF instruments in support of its low-income members, and called for further strengthening Bank-Fund collaboration in this area.

10. We welcomed the joint Bank-Fund review of the poverty reduction strategy approach and noted the contribution the PRS approach is making to enhancing country leadership of the development agenda, promoting the articulation of clear and coherent country policies and priorities for spurring growth and reducing poverty, improving budget and monitoring systems, and sharpening the focus on development results. We noted that country ownership based on broad participation is now central to the PRS approach. We also noted the value of country-led diagnostics including poverty and social impact analysis in supporting the PRS approach. Good progress notwithstanding, continued efforts are needed to strengthen poverty reduction strategies and their implementation in many countries. This includes efforts by countries to improve policies, domestic resource mobilization, governance, and accountability and by donors to provide support in a predictable, aligned, and harmonized manner.

11. We support the World Bank’s efforts, including through the Global Environment Facility, to assist member countries in measures to mitigate and adapt to the impact of climate change and improve energy efficiency and access to renewable and cost-effective energy; and welcomed efforts to follow up on the Gleneagles plan of action with early consultations to identify pragmatic investment and financing policy actions that can help further the goals of the United Nations Framework Convention on Climate Change. We look forward to a report for our next meeting on progress made in developing dialogue with partner countries and institutions and a future investment framework.

12. The Committee considers the issue of enhancing the voice of developing and transition countries in our institutions to be of vital importance. We will continue our discussions with a view to building the necessary political consensus on this matter, taking into account progress in the context of the IMF quota review.

13. The Committee expressed its appreciation to Mr. Trevor Manuel, Minister of Finance of South Africa, for his valuable leadership and guidance as Chairman of the Committee during the past four years, and welcomed his successor, Mr. Alberto Carrasquilla, Minister of Finance and Public Credit of Colombia. We expressed our gratitude to James Wolfensohn for his outstanding leadership of the World Bank Group during the last 10 years, and welcomed the new President of the World Bank, Paul Wolfowitz, who attended his first meeting of the Development Committee, and wished him a successful tenure. The Ministers also expressed their warm thanks to Mr. Thomas Bernes upon conclusion of his tenure as the Committee’s Executive Secretary.

14. The Committee’s next meeting is scheduled for April 23, 2006, in Washington, D.C.


Notes:

1. In this document "World Bank" and "Bank" refer to the International Bank for Reconstruction and Development and the International Development Association. "World Bank Group" and "Bank Group" refer to the broader group of World Bank institutions that includes the International Finance Corporation, the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes. [Return]

2 The special drawing right (SDR) is an international reserve asset created by the IMF and allocated periodically to its members as a supplement to their foreign currency and gold reserves. The SDR is also the standard unit of account for the IMF’s operations. It represents a weighted basket of four major currencies: the US dollar, the Japanese yen, the pound sterling and the euro. At the end of 2005 the exchange rate was SDR 1 = C$1.66. [Return]

3 When a member’s holdings of SDRs are greater (lesser) than its cumulative allocation, that member (the Fund) receives interest on the difference. [Return]

4 Economic disruption in the less severely hit countries of Thailand, Malaysia, Bangladesh, Somalia, Kenya and Tanzania was negligible. Seychelles was moderately affected. [Return]

5 PRSPs were originally conceived as a comprehensive policy mechanism to link heavily indebted poor country debt relief more closely with poverty reduction initiatives. They are rapidly evolving into the primary statement of the development strategy of the world’s poorest countries. [Return]

6 Côte d’Ivoire, Liberia, Seychelles and Zimbabwe. [Return]

7 Canada will pay its contribution to IDA14 in three equal installments and benefit from a discount of C$88.43 million for a net contribution of C$954.82 million. The discounted amount will require note issuances of C$318.27 million each fiscal year. [Return]

8 The PSLOs include: the regional office of International Trade Canada in Vancouver, Alberta Economic Development, Saskatchewan Trade and Export Partnership, Manitoba Trade and Investment, Canadian Manufacturers & Exporters, World Trade Centre Montréal, and Business New Brunswick. [Return]

Annex notes:

1 As endorsed by Heads of State and Government in the UN General Assembly on September 8, 2000. [Return]

2 As endorsed by Heads of State and Government in the UN General Assembly on September 8, 2000. [Return]

3 The report can be found at



pdf http://www.imf.org/external/np/omd/2005/eng/091505.pdf

. [Return]

4 As endorsed by Heads of State and Government in the U.N. General Assembly on September 8, 2000. [Return]