Communiqué of the International
Monetary and Financial Committee of the Board of Governors of
the International Monetary Fund
Dubai, September 21, 2003
1. The International Monetary and Financial Committee
held its eighth
meeting in Dubai on September 21, 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 Cancún. 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, D.C. on
April 24, 2004.
INTERNATIONAL MONETARY AND FINANCIAL COMMITTEE
ATTENDANCE
September 21, 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
IMF EXTERNAL RELATIONS DEPARTMENT
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