Annex C
COMMUNIQUÉ OF THE INTERNATIONAL MONETARY
AND FINANCIAL COMMITTEE OF THE BOARD OF GOVERNORS OF THE INTERNATIONAL
MONETARY FUND
Dubai, 21 September 2003
1. The International Monetary and Financial
Committee held its eighth meeting in Dubai on 21 September 2003,
under the Chairmanship of Mr. Gordon Brown, Chancellor of the
Exchequer of the United Kingdom. The Committee expresses its gratitude
to the Dubai authorities and the government of the United Arab
Emirates for the excellent arrangements.
THE GLOBAL
ECONOMY AND
FINANCIAL MARKETS
2. The Committee welcomes the increasing
signs that economic activity is strengthening in many economies,
and the improved prospects for a steady and strengthening global
recovery going forward. The major uncertainties have lessened
since we met last April. Nevertheless, risks remain in many countries
and it is important that policymakers stand ready to take the
necessary policy actions. The Committee underscores the importance
of close international cooperation and determined action across
the membership to foster a strong, sustainable, and broad-based
economic recovery.
3. The Committee emphasizes that, as the
recovery proceeds, all countries have an interest in seeing more
balanced growth with orderly adjustment. Sustained and vigorous
structural reforms in many areas, and domestic sources of growth,
are important in this respect. The Committee agrees on the need
for continued focus by the IMF on exchange rate issues across
the membership.
4. The international community must urgently
make progress on trade and development. Ministers reaffirm their
full political commitment to a multilateral rules-based approach
to trade liberalization, and to making substantial and concrete
progress. Ministers were disappointed at the breakdown of trade
negotiations in Cancun. Ministers urge a speedy resumption of
the Doha Round, which is vital for strong global growth and our
development objectives. This should focus on the issues of importance
to all countries of open markets and fair access and the reduction
of trade-distorting subsidies in all areas, notably in agriculture.
The Committee reiterates the crucial importance of removing the
obstacles and moving forward without delay, and calls on all countries
to play their part. It stresses the importance of the IMF's initiative
to provide assistance to countries to help them address the transitional
impact of trade reforms, which will contribute to the Doha Round.
5. In the advanced economies, monetary policy
should continue to support demand in the context of low inflation,
and the automatic fiscal stabilizers should be allowed to operate
within credible medium-term frameworks to deliver fiscal consolidation.
The vigorous pursuit of structural reforms, and enhanced corporate
governance and transparency are key to stronger, globally balanced
growth. In the United States, where the fiscal stance has substantially
supported activity, fiscal policy will need to focus on strengthening
sustainability over the medium term. In Europe, progress in structural
reforms should be accelerated and deepened both to strengthen
work incentives, investment, and competition and to address the
fiscal pressures of population aging. In Japan, continued efforts
will be necessary to strengthen the banking and corporate sectors
and end deflation, and to make a beginning toward fiscal consolidation
over the medium term.
6. The improved financial market environment
provides a valuable window of opportunity for emerging market
economies to continue to pursue ambitious institutional and structural
reforms which, together with sound macroeconomic policies, will
enhance growth prospects and reduce vulnerabilities. While many
countries have strengthened policies, key priorities remain to
improve fiscal positions, strengthen banking and corporate sectors,
reduce balance sheet vulnerabilities, and foster more broadly-based
growth. Growth in the Middle East and North Africa has picked
up. However, the challenge facing the region will be to accelerate
medium-term growth and absorb the rapidly growing labor force.
7. The Committee reaffirms its support for
a multilateral effort to reconstruct and redevelop Iraq, and welcomes
the constructive role being played by the IMF. It looks forward
to the donors conference in Madrid next month based on a comprehensive
needs assessment involving the World Bank and the IMF. The Committee
supports the IMF providing, subject to its policies, financial
and other assistance to Iraq.
8. Growth prospects in many low-income countries
have strengthened, underpinned by improved macroeconomic policies
and domestic reforms. However, significantly faster growth will
be needed to reduce poverty and meet the Millennium Development
Goals (MDGs) set out in the UN Millennium Declaration. This requires
stronger policy frameworks and institutions, better governance,
higher and more effective aid flows, and improved market access.
African countries should continue to press forward with the region-wide
implementation of the New Partnership for Africa's Development
(NEPAD), particularly to strengthen the foundations for investment
and private sector-led growth.
STRENGTHENING IMF
SURVEILLANCE AND
PROMOTING INTERNATIONAL
FINANCIAL STABILITY
9. Strengthened and effective IMF surveillance
is essential to enhancing crisis prevention and promoting stability
and sustainable global growth. The Committee welcomes the ongoing
reforms to strengthen the framework for IMF surveillance, and
underlines the importance of enhancing and implementing surveillance
consistently and evenhandedly across the membership. The Committee
also welcomes the increased focus of surveillance on capital markets,
and encourages the IMF and the Financial Stability Forum working
together to identify gaps and further strengthen assessments of
systemic weaknesses in financial markets.
10. The Committee stresses the need for
the IMF to continue to improve the quality, effectiveness, and
persuasiveness of its surveillance. This will involve: sharpening
surveillance, especially in systemically and regionally important
countries; working to enhance the impact of IMF policy advice;
and continuing efforts to bring fresh perspectives to assessments.
The Committee looks forward to discussing progress in these areas
following the Executive Board's 2004 biennial review of surveillance.
11. The Committee emphasizes that it is
particularly important that surveillance focus on identifying
potential problems early and provide candid advice on policy reforms.
In this respect, Committee members identified a number of key
issues for the coming year, including: progress on structural
reform and on medium-term sustainable fiscal frameworks; reducing
balance sheet vulnerabilities, including currency mismatches,
and improving debt sustainability; and encouraging policy measures
to reduce global imbalances.
12. The Committee underscores the importance
of increased transparency and candor of the IMF's advice to members.
It notes the Executive Board's recent agreement on a policy of
voluntary but presumed publication of IMF Article IV reports and
program documents, and the enhanced provisions for exceptional
access.
13. The Committee emphasizes its support
for ways to achieve some of the objectives of the Contingent Credit
Lines (CCL), intended to reduce vulnerabilities and provide precautionary
support for members with strong policies in dealing with external
financial developments. It looks forward to further work in this
area.
14. The Committee welcomes the progress
in strengthening the framework for crisis resolution, especially
the inclusion by an increasing number of countries of collective
action clauses (CACs) in their international sovereign bonds,
and encourages their use on a voluntary basis by other countries.
It also calls on the IMF to promote the voluntary inclusion of
CACs. The Committee looks forward to the efforts led by sovereign
debtors and private creditors to develop a voluntary Code of Conduct,
and encourages the IMF to continue to contribute to this work.
It looks forward to the ongoing work on issues of general relevance
to the orderly resolution of financial crises, including transparency
and disclosure, aggregation and inter-creditor equity. The Committee
looks forward to a report on progress at its next meeting.
ACCELERATING POVERTY
REDUCTION AND
STRENGTHENING SUSTAINABLE
ECONOMIC GROWTH
IN LOW-INCOME
COUNTRIES
15. The Committee stresses that the IMF
has an important role to play in helping low-income countries
achieve high and sustained growth and poverty reduction, in close
cooperation with the World Bank. It agrees that this support should
be firmly aligned behind Poverty Reduction Strategy Papers and
that the Fund should work in its core areas of competence alongside
the Bank in support of the Millennium Development Goals. The IMF
needs to remain engaged with low-income countries over the long
term through well-targeted technical assistance, capacity-building,
surveillance, and, when warranted, temporary financial assistance.
The Committee looks forward to reviewing Bank-Fund collaboration
in that area at its next meeting.
16. The Committee emphasizes the importance
of initiatives to enhance the IMF's support for low-income countries,
including ensuring that macroeconomic policy frameworks support
higher and sustained growth and poverty reduction; improving governance
and strengthening institutions to support growth and private sector
development; reducing vulnerability to shocks; and helping countries
move beyond sustained reliance on IMF financial arrangements when
ready. The Committee underscores the importance of technical assistance,
and looks forward to work on adapting IMF instruments and reviewing
PRGF financing. The Committee looks forward to a comprehensive
review of progress at its next meeting.
17. The Committee emphasizes the urgent
need to enhance market access and to increase the level and effectiveness
of donor resources for low-income countries. In order to help
achieve the Millennium Development Goals, the Committee calls
upon the IMF to cooperate with the World Bank in work on aid effectiveness,
absorptive capacity, and results-based measurement mechanisms,
and in examining the merits of various policy options and financing
mechanisms, such as an international financing facility, to mobilize
the substantial additional resources that are needed over the
medium term. Developing and emerging market countries should also
be closely involved. The Committee looks forward to a report by
the next Annual Meetings.
18. The Committee notes the progress in
providing debt relief to the world's poorest countries under the
enhanced HIPC Initiative. It calls on the IMF, in collaboration
with the World Bank, to develop strategies to help countries implement
the necessary policies and reforms to reach decision and completion
points as quickly as possible, and achieve a lasting exit from
unsustainable debt. The Committee urges all creditors that have
not yet done so to deliver debt relief in full and invites the
IMF to report on the compliance of countries. It recognizes the
importance of providing topping up as appropriate, and of the
on-going discussions on the topping-up methodology and the financial
implications.
OTHER ISSUES
19. The Committee stresses that the IMF's
effectiveness as a cooperative institution depends on all members
having an appropriate voice and representation. The Committee
welcomes the measures being taken to improve the capacity of developing
and transition countries to participate more effectively in IMF
policy formulation and decision-making. It welcomes the IMF Executive
Board's progress report on quotas, representation and voice and
asks the IMF to examine these issues further, and will review
progress at its next meeting. The Committee recommends completion
of the ratification of the Fourth Amendment.
20. The Committee welcomes the further actions
taken by the international community to combat money laundering
and the financing of terrorism, and the progress with the 12-month
pilot program of AML/CFT assessments. The Committee is encouraged
by the continued close cooperation among the IMF, the World Bank,
the FATF, and FATF-style regional bodies, and increased country
involvement, and supports the enhanced delivery of critically
needed technical assistance. The Committee encourages all members
to adopt AML/CFT laws and practices consistent with the agreed
international standards, and looks forward to a full report at
the conclusion of the pilot program.
21. The Committee welcomes the work of the
Independent Evaluation Office, and its role in enhancing the learning
culture, effectiveness, and accountability of the IMF. It emphasizes
the importance of the IMF taking forward the work on prolonged
use, capital account crises, and fiscal adjustment, in the light
of the IEO's recommendations.
22. The Committee expresses its appreciation
of the work of Shigemitsu Sugisaki as Deputy Managing Director
and Kenneth Rogoff as Economic Counsellor.
23. The next meeting of the IMFC will be
held in Washington, DC on 24 April 2004.
INTERNATIONAL MONETARY
AND FINANCIAL
COMMITTEE: ATTENDANCE
21 September 2003
Chairman
Gordon Brown
Managing Director
Horst Köhler
Members or Alternates
Ibrahim A Al-Assaf, Minister of Finance, Saudi Arabia
Mervyn King, Governor, Bank of England, United Kingdom
(Alternate for Gordon Brown, Chancellor of the Exchequer,
United Kingdom)
Peter Costello, Treasurer of the Commonwealth of
Australia
Job Graca, Deputy Minister of Finance, Angola
(Alternate for José Pedro de Morais, Jr, Minister
of Finance, Angola)
Rodrigo de Rato Figaredo, First Vice President and
Minister of Economy, Spain
Hans Eichel, Minister of Finance, Germany
Geir Hilmar Haarde, Minister of Finance, Iceland
Jamaludin Mohd Jarjis, Finance Minister II, Malaysia
Mohammed K Khirbash, Minister of State for Finance
and Industry, United Arab Emirates
Aleksei Kudrin, Deputy Chairman of the Government
and Minister of Finance, Russian Federation
Mohammed Laksaci, Governor, Banque d'Algérie
Roberto Lavagna, Minister of Economy and Production,
Argentina
John Manley, Minister of Finance, Canada
Jean-Claude Trichet, Governor, Banque de France
(Alternate for Francis Mer, Minister of Economy,
Finance and Industry, France)
Antonio Palocci, Minister of Finance, Brazil
Didier Reynders, Minister of Finance, Belgium
Toshihiko Fukui, Governor, Bank of Japan
(Alternate for Masajuro Shiokawa, Minister of Finance,
Japan)
Yaga V Reddy, Governor, Reserve Bank of India
(Alternate for Jaswant Singh, Minister of Finance
and Company Affairs, India)
John W Snow, Secretary of the Treasury, United States
Paul Toungui, Minister of State, Minister of Finance,
Economy, Budget and Privatization, Gabon
Giulio Tremonti, Minister of Economy and Finance,
Italy
Kaspar Villiger, Minister of Finance, Switzerland
Gerrit Zalm, Minister of Finance, The Netherlands
Zhou Xiaochuan, Governor, People's Bank of China
Observers
Willem F Duisenberg, President, European Central
Bank (ECB)
Roger W Ferguson, Jr, Chairman, Financial Stability
Forum (FSF)
Heiner Flassbeck, Officer-in-Charge, Division on
Globalization and Development
Strategies, United Nations Conference on Trade and
Development (UNCTAD)
Donald J Johnston, Secretary-General, Organisation
for Economic Cooperation and Development (OECD)
Ian Kinniburgh, Director, Development Policy and
Planning Office, Department of Economic and Social Affairs, United
Nations (UN)
Malcolm D Knight, General Manager, Bank for International
Settlements (BIS)
Eddy Lee, Director, International Policy Group Department,
International Labour Organization (ILO)
Trevor A Manuel, Chairman, Joint Development Committee
Pedro Solbes, Commissioner for Economic and Monetary
Affairs, European Commission
Francisco Thompson-Flôres, Deputy Director-General,
World Trade Organization (WTO)
James D Wolfensohn, President, World Bank
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