Ministers Update Global Growth Strategy, Agree on Interim ESAF Financing

• Author: David Cheney
• Position: Editor, IMF Survey
• Pages: 1-3

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Gathering in Washington on October 1-3 for the Fifty-First Annual Meetings of the IMF and the World Bank, finance ministers and central bank governors welcomed the recent agreement on ways to finance a continuation of the IMF's enhanced structural adjustment facility (ESAF) for the interim period 2000-2004, after which it will become self-sustaining. This clears the way for the IMF to participate fully in the joint IMF-World Bank initiative to help highly indebted poor countries put their external debt burdens on a sustainable basis.

Ministers and governors at the Meetings shared the IMF's cautious optimism about global economic prospects through the medium term. They reaffirmed the cooperative strategy to strengthen the global expansion, which they acted to broaden, and agreed on the need for a strong and effective IMF to help members carry this expansion out. In this connection, they strongly supported the IMF's development of a Special Data Dissemination Standard to guide members in publishing economic and financial data. And they gave new prominence to the objectives of high-quality government expenditure, good governance (including the fight against corruption), and sound banking systems.

The Meetings also produced a consensus on the need to expedite the commitment of additional financial resources to enable the IMF to fulfill its mandate in the increasingly globalized economy. Ministers called for action to reach a conclusion on an increase in IMF quotas under the Eleventh General Review as soon as possible and endorsed a doubling of borrowed resources under the General Arrangements to Borrow (GAB) through the establishment of new arrangements to borrow. They also endorsed a onetime "equity" SDR allocation, with the exact amount to be determined later.

Commenting on the good performance of the world economy and generally favorable prospects, IMF Managing Director Michel Camdessus, at a September 26 press conference, emphasized that there was no room for complacency. He underscored the need for the IMF to step up efforts to meet the challenges of the global economy by continuing to sharpen the focus of its surveillance through more continuous and candid dialogue with member countries, more attention to capital account developments and to countries where economic and financial developments could have spillover effects, and to regional surveillance. Other recent steps have included the introduction of mechanisms to provide emergency financing to member countries facing financial crises, to help members stabilize currencies, and to support countries emerging from conflicts.

The October 1-3 Annual Meetings were preceded by meetings of the IMF's principal advisory body, the Interim Committee of the IMF's Board of Governors on the International Monetary System (the Interim Committee) on September 29; the Joint Bank and Fund Committee on the Transfer of Real Resources to Developing Countries (the Development Committee) on September 30; and earlier meetings of various groups including the Group of Ten and Group of Seven industrial...