A quarterly magazine of the IMF

December 2000, Volume 37, Number 4

Pressing Issues of Globalization and Poverty Reduction Are Focus of 2000 IMF–World Bank Annual Meetings

Prague, the capital of the Czech Republic, one of the countries that has made strong progress in the transition to a market economy, was the appropriate setting for the 2000 Annual Meetings of the IMF and the World Bank. The meetings, which were held on September 26-28, were chaired by Trevor Manuel, the South African Finance Minister. Their main focus was on the urgent need to extend more widely the benefits of globalization. Speakers noted that while conditions in the global economy are encouraging and prospects for growth are generally favorable, poverty continues to be the single greatest challenge for the international community.

The plight of the poorest countries was emphasized by Czech President Vaclav Havel in his opening speech. Such poverty is one of the most visible manifestations of our contradictory civilization, he emphasized. He called on his audience "to also think about another restructuring—a restructuring of the entire system of values that forms the basis of our civilization today."

The tone for much of the discussion that followed in the plenary sessions was set by IMF Managing Director Horst Köhler in his opening address to his first Annual Meetings. He outlined his vision for the future of the IMF as "an active part of the workforce to make globalization work for the benefit of all." (For excerpts from Köhler's address, see below).

The Managing Director's vision of the future of the IMF was endorsed by the International Monetary and Financial Committee (IMFC), which met immediately ahead of the formal opening of the meetings. The IMFC urged the world community to place renewed emphasis on promoting broadly shared prosperity, sustained growth, and poverty reduction. It emphasized that the IMF, together with the World Bank, is uniquely placed to share in this effort.

A similar note was struck at the meeting of the joint World Bank- IMF Development Committee, which emphasized the concern that debt relief should lead to poverty reduction and economic development. This committee called on the IMF and the World Bank to make every effort to bring 20 countries to the decision point under the Heavily Indebted Poor Countries (HIPC) initiative by the end of this year. This is expected to result in combined debt-service relief of more than $30 billion. Together with traditional debt-relief mechanisms, a total of about $50 billion will be provided to these countries.

Governors representing the 182 member countries of the IMF spoke during the plenary sessions of the meetings. In addition to the dominant message of poverty reduction, governors addressed a number of interrelated topics. These included the implications of the current high price of oil, particularly for developing countries that depend on oil imports; support for the goal of bringing debt relief to 20 heavily indebted countries by the end of the year; the need to strengthen further the international financial architecture; and the division of labor between the IMF and the World Bank.

A number of other events were held in conjunction with the Annual Meetings. President Havel hosted a reception at Prague Castle on the Saturday before the meetings for a discussion of different approaches to issues of poverty and debt relief. This was attended by Horst Köhler, President James Wolfensohn of the World Bank, and representatives of civil society. The following day, Josef Tosovsk´y, the Governor of the Czech Central Bank, delivered the annual Per Jacobsson lecture, named after the third managing director of the IMF, on lessons from the transition 10 years later. And an active program of seminars was held for private sector leaders and senior officials on the theme of "Making the Global Economy Work for Everyone."

Horst Köhler's Vision for the IMF

At the 2000 Annual Meetings in Prague, IMF Managing Director Horst Köhler for the first time articulated his vision for the future of the IMF. Excerpts from Köhler's address follow:

In my vision, the IMF should

• strive to promote sustained noninflationary economic growth that benefits all people of the world;
• be the center of competence for the stability of the international financial system;
• work in a complementary fashion with other institutions established to safeguard global public goods; and
• be an open institution, learning from experience and dialogue, and adapting continuously to changing circumstances.

In this vision, I see the IMF as an active part of the workforce to make globalization work for the benefit of all. This vision builds on an enhanced partnership with the World Bank, based on a clear sense of the complementarities of our two institutions.

Globalization and cooperation

If the IMF did not exist already, this would be the time to invent it. More than ever, globalization requires cooperation, and it requires institutions that organize this cooperation. Its 182 members make the IMF a truly global institution and the cooperative nature of this institution is an invaluable asset. We should all seek to preserve and strengthen this asset. Strengthening it requires trust in cooperation. This means that members need to listen to each other and that the IMF should see itself as a partner to its members and as a provider of help for self-help. And it means that the IMF's mandate is directed to promoting the international common good.

Refocusing the IMF

The IMF's focus must clearly be to promote macroeconomic stability as an essential condition for sustained growth. To pursue this objective, the IMF has to concentrate on fostering sound monetary, fiscal, and exchange rate policies, along with their institutional underpinnings and closely related structural reforms. And more important than ever in the modern economy is the IMF's mandate to oversee the international monetary system and to ensure its effective operation. My ambition is not to have more and more lending programs but to place crisis prevention and thus surveillance at the center of the IMF's activities.

Financial architecture

The international financial system is stronger now than before the outbreak of the Asian crisis. But we should beware of complacency. Financial sectors in many countries are not yet as robust as they need to be, and there is a risk that the high growth rates could weaken the momentum of reform. All members have to ask themselves how they can accelerate the implementation of these reforms. I think it is in the interest of all that the entire membership be fully involved and take full ownership of the initiatives in this area.

Poverty and debt reduction

The Poverty Reduction and Growth Facility (PRGF) is an innovative instrument in the IMF's efforts to make globalization work for the benefit of all: first, because it aims at tackling poverty from its root causes; and second, because its concessional character demonstrates practical solidarity with the poor.

Disengagement from the poor countries would be inconsistent with the mandate of the IMF and it would also deepen the division of the world. The PRGF is also a key vehicle to help make the HIPC [Heavily Indebted Poor Countries] Initiative a success. In no area is cooperation between the Bank and the IMF in the coming months more critical than here. The ultimate test of the success of this initiative is how effectively debt relief contributes toward poverty reduction.

The IMF of the future

I see the discussion on changes in the IMF as a permanent process and consider it very important that these further discussions have their center within the IMF itself. I know that staff, management, and the Executive Board are deeply committed to the IMF's mandate and want to give their best. I call on the membership of the IMF to make good use of this dedication and to work with the IMF in a new spirit of global partnership.

Research at the IMF

One of the IMF's most important functions is economic research. This research provides a foundation for its operations and policy recommendations to member countries. The IMF disseminates its findings as widely as possible through a variety of vehicles, including conferences, publications, and its website, to keep policymakers, markets, and the academic community informed and to promote dialogue with experts outside the IMF.

Virtually all of the IMF's research publications, including working papers, policy discussion papers, and reports such as the World Economic Outlook and International Capital Markets, are available online in full-text format at the Research at the IMF website (http://0-www-imf-org.library.svsu.edu/external/pubs/res/index.htm). No subscription or registration is required. This comprehensive website also includes information on conferences organized by the IMF, external publications of IMF staff (including in academic journals), a list of ongoing research projects, and other research-related activities of the IMF and its staff.

IMF research conference

To promote the exchange of ideas between IMF researchers and researchers from around the world, the IMF recently launched a series of annual conferences. The first annual research conference was held in Washington, DC, on November 9-10, 2000. Organized by the IMF's Research Department, this event brought together academic researchers from various universities and institutions around the world and young researchers in the IMF to present and discuss papers on topics of current policy interest. The themes of this year's conference included private sector involvement in crisis resolution, monetary and exchange rate policies in crisis situations, effects of adjustment programs on poverty and financial markets, and issues related to exchange rate regimes.

Professor Maurice Obstfeld delivered the first Mundell-Fleming Lecture, in which he reevaluated the renowned Mundell-Fleming model, a paradigm of international monetary economics for several decades, from a current perspective. Professor Robert Mundell, winner of last year's Nobel Prize in Economics and a former IMF staff member, delivered the keynote address. A selection of the papers presented, along with comments and discussions, will be published in a special issue of IMF Staff Papers in June 2001. The conference program and downloadable versions of the papers can be found at the Research at the IMF website (follow the link to "Conferences and Seminars").

IMF Staff Papers

The IMF's scholarly journal, edited by a team headed by Robert Flood, publishes the findings of selected high-quality research conducted by IMF staff and distinguished guest authors on a variety of topics of interest to a broad audience, including academics and policymakers. The papers published in the journal are subject to a rigorous review process using both internal and external referees.

The contents of the journal, including full-text versions of articles and an archive of past issues of the journal, are available online at the Research at the IMF website.

IMF Research Bulletin

This quarterly bulletin, edited by Eswar Prasad, provides an overview of research-related activities at the IMF. The Bulletin contains summaries of research done at the IMF on specific topics that are of academic interest and also have policy relevance. In addition, it contains a comprehensive listing of new research publications such as Working Papers, Occasional Papers, and Policy Discussion Papers. The Bulletin also provides conference notices and summaries, a listing of external publications of IMF staff, a list of visiting scholars, surveys of ongoing research projects, and information about numerous other research-related activities.

The contents can be viewed online at the Research at the IMF website. Free subscriptions are available through e-mail (send a request to resbulletin@imf.org) or regular mail (write to Publication Services, Box X2000, IMF, Washington, DC 20431 U.S.A.).