Press Release No. 05/183

Press Release: Statement by the IMF Managing Director Following Executive Board Discussion on the G-8 Proposal for Further Debt Relief

August 3, 2005

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement after today's meeting of the Executive Board to discuss the proposal for HIPC debt cancellation agreed by the G-8 Heads of State and Government at the Gleneagles Summit on July 8, 2005:

"Executive Directors reiterated their commitment to further debt relief by the IMF as part of the international support for low-income countries, including its poorest and most heavily indebted members. They emphasized that the G-8 proposal could go a long way to complete the process of debt relief for these countries by providing additional balance of payments support from the Fund, thereby freeing up resources to help them reach the Millennium Development Goals.

"Directors noted that to provide effective benefits to its recipients, debt relief must be designed and implemented carefully. There was a clear consensus among Directors on the importance of preserving: (i) the Fund's ability to provide concessional financial support to its low-income members; and (ii) the principle of uniformity of treatment, to ensure that all low-income members are treated by the Fund in an even-handed manner. Staff will work on potential modalities to implement the proposal as a basis for further discussions by the Executive Board before the Annual Meetings. Directors reiterated that the Fund will continue to operate under existing policies and procedures until decisions to change or modify these policies are taken by the required majorities.

"The meeting followed the Executive Board's initial formal exchange of views on the proposal that took place on June 22 and provided an opportunity for Executive Directors to explore in more detail the financial, legal, and policy implications of the proposal for the Fund. It also complemented the continuing discussion in the Executive Board on ways to enhance the role of the Fund in low-income countries, including through: (i) the establishment of a nonfinancial mechanism to support policies in low-income countries; (ii) financing the continuation of the Poverty Reduction and Growth Facility; and (iii) the establishment of a facility to help countries facing exogenous shocks."