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World: IMF, World Bank Prepare for Annual Meetings

  • Robert Lyle

Washington, 27 September 1996 (RFE/RL) - The finance ministers, central bank governors and other economic officials from the 180 member nations of the International Monetary Fund (IMF) and the World Bank are beginning to arrive in Washington for the annual meetings of the two main global financial institutions.

The actual plenary sessions begin on Tuesday, but a series of special leadership meetings, seminars and discussions of issues fill every day until then.

Today, the group of 24 made up of many poorer countries and old non-aligned countries hold meetings to discuss how the views of the most poverty stricken of the world can best be incorporated in the deliberations of the IMF and World Bank.

Tomorrow, the finance ministers and central bank governors of the G-7 group of major industrial nations, plus Russia, will be meeting for their regular sessions.

U.S. Treasury Secretary Robert Rubin, who will be hosting the get-together, says the group will discuss each other's economic situations and review their positions on major issues facing the global economy, as well as operations of the fund and bank.

Moscow has not announced the makeup of its delegation, but officials assume it will include Deputy Prime Minister Vladimir Potanin, who was recently named by President Boris Yeltsin to head the commission responsible for relations with international finance organizations and the Group of Seven.

On Sunday, the ministers from the Group of 10 -- the U.S., Japan, Germany, Great Britain, France, Italy and Canada from the G-7 plus Belgium, the Netherlands, Switzerland and Sweden (there are actually 11) -- will meet to discuss the expanding General Arrangements to Borrow (GAB). The GAB is an arrangement among a group of nations and central banks that agrees to make up to $25 billion available if the IMF should ever have an emergency need for cash.

That pool is now being expanded to over $51 billion and the number of countries agreeing to support it is being doubled.

Also on Sunday, the IMF's policy-making Interim Committee meets to discuss the general direction of the fund's operations and the status of its financial health.

IMF Managing Director Michel Camdessus says the global economy is generally strong and growing and so is the fund, but that the organization must prepare for the future. "There is no room for complacency, particularly when the situation looks good," he laughingly told reporters yesterday.

In addition to reviewing actions the fund has taken in the past year to strengthen its surveillance of member nations' economies, to spot and avoid problems earlier, Camdessus says the fund must push ahead to increase members' quotas. The quotas, or membership fees, should be doubled, says Camdessus, which would raise the IMF's capital base from the current about $2 billion to around $4 billion.

Some of the fund's larger members still question the need for such a big increase, but Camdessus says the IMF will begin pushing up against its liquidity caps next year and must begin the process of raising the quotas.

Of special interest to most members from Eastern and Central Europe and the former Soviet Union, Camdesuss says the committee will discuss a special allocation of the fund's own money, SDRs or Special Drawing Rights, to countries which have none.

Countries which joined the fund in the 1940s and 1950s each got an allocation of SDRs. It has long been a sore point that there were no extra SDRs left over to give to countries which became members in more recent years. None of the former Communist states ever received an allocation.

Camdessus says he has achieved agreement in principle among the Board of Executive Directors to push ahead on an equity allocation to provide all members with the same ratio of SDRs.

"This would provide a modest but meaningful SDR allocation to each of the fund's members, and would make very significant progress toward equity," he said.

The move will require an amendment to the IMF's Articles of Agreement, and that will have to be approved by at least 80 percent of the fund's 180 member nations. Camdessus says he would like to see agreement during these meetings to submit that amendment to the members.