Speech

The IMF as a Partner in Implementing the Monterrey Consensus, Address by Horst Köhler, Managing Director of the IMF

October 30, 2003

As Prepared for Delivery

Mr. President, Secretary-General, Excellencies, Ladies and Gentlemen:

1. The global economic outlook is improving. Prospects for a recovery are firming in the advanced economies, led by developments in the United States. This is good news for emerging market and developing country economies as well, which have also benefited from a supportive financial market environment. But we know that risks remain. Chief among these risks are the excessive dependence of the world economy on growth in the United States and the resulting global current account imbalances. Resolving these imbalances in an orderly manner must be the primary objective of international economic policy. This requires a cooperative approach involving all major countries and regions. Such an approach must strengthen the domestic forces of growth, particularly in Europe and Japan, building on the new momentum for structural reform.

2. Sound and sustained global growth remains the single most important condition for making decisive progress in the fight against poverty. In the Millennium Development Goals (MDGs) we now have measurable objectives. The two pillars of the Monterrey Consensus — reflected also in Africa's own New Partnership for Africa's Development — give us a common policy framework defining the responsibilities of the developing countries and of the international community in working toward these objectives. And with the PRSP and HIPC processes, we have the operational vehicles to take us to the agreed goals. These processes are underway and, in many countries, yielding results — albeit more slowly than many of us would like to see. There is surely room for improvement. But as we take stock, we must keep in mind that progress must be achieved on the ground, in each individual country. This is the time for steadfast implementation, not for reembarking on a search for new development strategies.

3. The IMF will continue to play its role in implementing the Monterrey Consensus. In our work with low-income members, we are concentrating on our core areas of competence: helping them establish a framework for sound macroeconomic policies and institutions, indispensable for sustained growth, investment, and job creation. To this end, we have reduced the scope of our conditionality by focusing it on those areas that are central to achieving key macroeconomic objectives. We are working hard to align better the PRSP, the national budget framework, and our own low-income lending facility, the PRGF. We are continuing to reinforce our technical assistance and training programs aimed at building capacity and strong institutions in developing countries, including through our regional technical assistance centers in the Pacific, the Caribbean, and most recently in East and West Africa. And we are working on strengthening the ability of our low-income members to guard against exogenous shocks and respond to them should they occur. Looking ahead, we are engaged in a comprehensive consultation with our members, donors, and civil society to guide us in our future work with low-income countries. Our key objective is to ensure that our engagement complements that of other development partners in working toward our common goal: decisive progress toward achieving the Millennium Development Goals as a concrete contribution in the fight against poverty.

4. But the Monterrey Consensus extends beyond poverty alleviation. It is also about building a stronger international financial system that helps all countries seize the benefits of globalization. Over the past several years, the Fund has been engaged with the international community in an intensive process of reform, and I believe we have made progress. We are focusing more on vulnerabilities in financial sectors and international capital markets. We are strengthening the framework of rules for the global economy, in collaboration with public and private sector institutions, by developing and implementing international standards and codes. We are continuing to examine ways to improve crisis management and resolution when crises do occur. And the quantum leap in transparency, both at the IMF and in our members, is providing more information to help markets function better. Overall, I believe our work has contributed to the remarkable resilience of the international financial system in the face of the unprecedented shocks of the past three years. But the increasing interdependence of the world's economies continuously poses new challenges for our member countries and for the IMF. Therefore, in our work, we must pay even more attention to the linkages between countries and regions and exercise evenhandedness, because crises can originate in mature markets as well as in emerging markets. Improving our ability to identify risks and vulnerabilities at an early stage, and our intensified work on domestic financial systems and international capital markets, must play a central role in this process.

5. The IMF's effectiveness as a cooperative institution depends on all members having an appropriate voice and representation. With that objective, we have recently taken several steps to bolster the capacity of Executive Directors' offices of developing and transition countries aimed at enhancing their effective participation in policy formulation and decision-making. And the Executive Board will continue to examine the issues of quotas, representation and voice, and report next April to our Governors, with whom responsibility for decisions lies.

Ladies and Gentlemen,

6. More than ever, our quest for global solutions to global problems requires cooperation for the global common good. The Monterrey Consensus is our joint policy framework in working toward achieving the Millennium Development Goals. In this effort, all developments partners need to do their part. We must resist hypocrisy and accept our respective responsibilities. The advanced economies need to improve market access, reduce trade-distorting subsidies, and provide more — and better coordinated — financial assistance. Developing countries need to stay the course in strengthening economic policies and good governance. Steadfast implementation is the key to decisive progress in our common fight against poverty. The IMF stands ready to do its part.