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IMF and World Bank Annual Meetings

Bern, 17.10.2007 - Federal Councillor Hans-Rudolf Merz as head of the Swiss delegation, State Secretary Jean-Daniel Gerber, Seco Director, and Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank (SNB), will take part in the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington from 20 - 22 October 2007. The most important topics of discussion in the meetings of the International Monetary and Financial Committee (IMFC) will be the situation in the international financial markets and the prospects for the global economy, the quota and voice reform in the Fund and the long-term financing of the IMF. The Development Committee deals with the strategic direction of the Word Bank Group and the role of the International Development Association (IDA).

The IMFC, the IMF's policymaking body, will first, as is customary, discuss the global economic outlook and the current conditions in the international financial markets. In the view of the IMF, the global economic prospects continue to be positive; the expansion in 2007 should be similar to that of the previous year with, albeit, very different geographic characteristics. Growth in the USA will be considerably lower, whereas the emerging market and developing countries continue to make progress. Growth in the Eurozone should outperform that of the USA. In 2008 much will depend on how strongly the turmoil in the financial markets will have an influence on the real economy. Besides the associated existent uncertainties, global imbalances will continue to persist.

An important point on the agenda of the IMFC is the quota and voice reform in the Fund. As a first reform step, the quota proportions for China, Mexico, South Korea and Turkey were increased in the 2006 Annual Meetings in Singapore because they were clearly underrated. Now there are specific proposals to be discussed in a second step. The focus will be a new calculation formula to ensure appropriate country representation. This should be accepted at the latest by the 2008 Spring Meetings. A further integral reform component is that of increasing the basic votes to enhance the voice of poor countries. Switzerland supports this reform in principle as appropriate representation of all countries is important for the legitimacy of the institution. It is campaigning for an economically sensible quota formula. Accordingly, the importance and openness of the financial centre of a country should be taken due account of. A further point on the agenda is the reform of the IMF financing model. IMF loans outstanding have dropped to a historic low. Since the IMF now finances its operating costs by the interest rate differential on its loans, the result is a considerable income shortfall for the foreseeable future. A set of alternative financing recommendations were drawn up at the start of the year already by a group of experts. The aim of the package of measures is mainly to make the revenue of the IMF less dependent on global economic developments and, thus, credit allocation.

In the run-up to the IMFC, G10 Ministers and Governors will hold a meeting. In accordance with the process of rotation in force, Japan will hold the chairmanship. On the agenda is the discussion about the impact of highly-leveraged institutions on the stability of the financial system and the extension of the General Agreements to Borrow.

The Development Committee will discuss how to refocus the global strategy of the World Bank so as to better respond to both of its goals of poverty reduction and sustainable and equitable growth. For the poorest countries it is proposing a differentiated approach which includes a model for assistance adapted to the needs of fragile states which suffer from weak institutions and are vulnerable to conflict. The Bank is also in the process of reviewing its range of services and financial and non-financial products to middle-income countries. The Bank is simplifying its lending procedures, and recently lowered its interest rates. In the area of Global Public Goods, the Bank highlights the environment and, in particular, climate change as the main problems. Switzerland fully supports the efforts of the bank in terms of climate change and recognises the need to extend the spectrum of activities of the bank to other topics which are equally as important as energy. However, Switzerland emphasises once more the need to work with other institutions with expertise in this sector. The ministers will discuss increasing the resources available for development cooperation and the improvement of aid in terms of size, predictability and consistency. Switzerland supports the principle ideas proposed, namely the development model based on the partner countries, strengthening their systems and institutions, transparent public finances, socially-responsible economic growth based on the private sector and benefiting the poor. The role of the International Development Association (IDA), the institution of the World Bank Group which grants loans at a reduced interest rate, is also the subject of discussions. The IDA intends to take on a key role in integrating the work of other donors and development partners. Switzerland fully supports this proposal.

In the run-up to the Annual Meetings, a meeting of the Swiss-led constituency in the IMF and World Bank will take place in Bern. The SNB is issuing invitations to this in the context of its 100th anniversary. The meeting will include a seminar on the topic of remittances. Along with Switzerland, Poland, Serbia and Azerbaijan, the constituency group is composed of the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan.

Address for enquiries:

Paul Inderbinen, Head of IMF and International Finance Section, Federal Finance Administration (FFA), tel. 031 322 61 66
Lukas Siegenthaler, Head, Multilateral Financial Institutions, State Secretariat for Economic Affairs (SECO), tel. 031 324 08 19
Christina Grieder, Head of the International Finance Institutions Section, Swiss Agency for Development and Cooperation (SDC), tel. 031 322 34 89

Publisher:

Federal Department of Finance
Internet: http://www.efd.admin.ch
Federal Department of Foreign Affairs
Internet: http://www.eda.admin.ch/eda/en/home/recent/media.html
Federal Department of Economic Affairs, Education and Research
Internet: http://www.wbf.admin.ch


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