Press Release No. 06/65

Press Release: IMF Managing Director Rodrigo de Rato and World Bank President Paul Wolfowitz Initiate Deeper Measures to Review and Enhance IMF-World Bank Cooperation

March 29, 2006

Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF) and Paul Wolfowitz, President of the World Bank Group, have initiated a range of measures to promote a deeper and early review of Fund-Bank collaboration, including the creation of a six-member External Review Committee. The measures initiated by the heads of the IMF and World Bank bring forward by a year, a joint staff review that had been scheduled for 2007, of how the Fund and Bank work together to enhance global economic performance and development.

The newly created Fund-Bank Review Committee will comprise Michael Callaghan, Executive Director of the Australian Treasury's Revenue group and a former IMF Executive Director; Caio Koch-Weser, Vice Chairman of Deutsche Bank, Germany's former Finance Secretary and a former World Bank Managing Director; Pedro Malan, Chairman of Unibanco and a former Minister of Finance of Brazil; William McDonough, Vice Chairman of Merrill Lynch and a former President of the Federal Reserve Bank of New York; Sri Mulyani Indrawati, Indonesia's Minister of Finance and a former IMF Executive Director; and Ngozi Okonjo-Iweala, Nigeria's Minister of Finance and a former Vice President and corporate Secretary of the World Bank Group. Mark Allen, Director of the IMF's Policy Development and Review Department and Danny Leipziger, Vice President of the World Bank's Poverty Reduction and Economic Management Network, will act as advisors to the Committee and facilitate contact between the Committee and the staffs of the two institutions. A Joint Task Force, made up of senior IMF and World Bank staff, has also been created to assist in the review process.

The Review Committee is expected to solicit a representative and broad-ranging sample of views from country members on the nature and practice of Fund-Bank collaboration, which has been guided since 1989 by a formal Concordat between the two institutions.¹ The Committee will present its final report to Fund and Bank management before the end of this year.

The Review Committee is expected to explore whether the areas of primary responsibility in the 1989 Concordat, as updated by subsequent reviews, provide a clear enough foundation for Fund-Bank collaboration. The Committee is also expected to consider whether the established areas of responsibility are consistent with the two institutions' mandates.

"The areas of common or joint interest have increased over time. To what extent is the division of labor mandated by the Concordat and subsequent reviews actually being implemented on the ground?" Messrs. de Rato and Wolfowitz stated. "In what ways, if any, may the demarcation of responsibilities be better applied, altered, or made more precise, in order to achieve more efficient and effective delivery of services to the membership of both institutions?"

The Committee is also expected to determine whether the "lead agency concept" works well, and whether the institutions can be held sufficiently accountable under this approach, while still coordinating their efforts. As part of this review, it is expected that the Review Committee will recommend specific improvements in Fund-Bank collaboration on country work, including on policy advice, lending operations, and technical assistance, and explore how collaboration can be tailored to suit the differing circumstances of the membership, including post-conflict countries, low-income countries, middle-income developing countries, and emerging market economies.

Another aspect of the review will delve into what improvements can be made to Fund-Bank collaboration on thematic work, including on financial sector issues (Financial Sector Assessment Programs), trade policy, Standards and Codes, debt sustainability analysis in low-income countries, the Poverty Reduction Strategy Paper (PRSP) process, growth prospects, donor coordination, and implementation of the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative.