European Parliament resolution on the strategic review of the International Monetary Fund (2005/2121(INI))
Date: 2006-03-14
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: International Monetary Fund, development policy, economic convergence, economic cooperation, economic relations, macroeconomics

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TEXT PROPOSED
BY THE COMMISSION

AMENDMENTS
BY PARLIAMENT

Amendment 71

Article 12, paragraph 4

4.
If the time limits have not been observed or if only part
of the allocated financial assistance is justified by the progress
the Commission shall
made with implementing an action,
request the beneficiary to submit observations within a speci-
fied period.
the beneficiary does not give a satisfactory
answer, the Commission may cancel the remaining financial
assistance and demand repayment of sums already paid.

If

4.
If the time limits have not been observed or if only part
of the allocated financial assistance is justified by the progress
the Commission shall
made with implementing an action,
request the beneficiary to submit observations within a speci-
fied period.
the beneficiary does not give a satisfactory
answer, the Commission may request clarification or further
explanations.
the
Commission shall cancel the remaining financial assistance
and demand repayment of sums already paid.

remains unsatisfactory,

the answer

If

If

Amendment 72

Article 13, paragraph 1

1.
The Commission shall be assisted by a committee
composed of representatives of the Member States and chaired
by the representative of
‘the
Committee’.

the Commission, hereinafter

1.
The Commission shall be assisted by a committee
composed of representatives of the Member States, including
representatives of local and regional authorities, and chaired
by the representative of
‘the
Committee’.

the Commission, hereinafter

Amendment 73

Article 14, paragraph 2, point (a)

(a) no later than 31 December 2010, an interim evaluation
report on the results obtained and the qualitative and quan-
titative aspects of the implementation of this Regulation;

(a) no later than 31 December 2010, an interim evaluation
report on the results obtained and the qualitative and quan-
titative aspects of the implementation of this Regulation.
This report shall,
in particular, contain information
relating to applications submitted, grant decisions taken
and the winding-up of financial assistance granted;

Amendment 74

Article 14, paragraph 2 a (new)

The Commission shall undertake to follow up swiftly
2a.
this initial, principally financial initiative by submitting its
proposed amendments to Decision 2001/792/EC as soon as
possible to the European Parliament.

P6_TA(2006)0076

Strategic review of the IMF

European Parliament resolution on the strategic review of the International Monetary Fund (2005/
2121(INI))

The European Parliament,

— having regard to Article 111(4) of the EC Treaty, which concerns the representation and position of the

Community at international level in the context of economic and monetary union (EMU),

— having regard to the Commission proposal of 9 November 1998 for a Council decision on the represen-
tation and position taking of the Community at international level in the context of economic and
monetary union (COM(1998)0637),

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— having regard to the Presidency conclusions of the Vienna European Council of 11 and 12 December

1998,

— having regard to its resolution of 23 October 2001 on the international monetary system — how to

make it work better and avoid future crises (1),

— having regard to its resolution of 3 July 2003 (2) on the eurozone in the world economy and the devel-

opments that can be envisaged in the next few years,

— having regard to the report of 15 September 2005 by the Managing Director of the International Mone-

tary Fund (IMF) on the Fund's Medium-Term Strategy (3),

— having regard to the decisions of the G8 Finance Ministers' meeting of 11 June 2005 on the cancellation

of debt for poor countries,

— having regard to Article 178 of the Treaty, on coherence between the policies that the EU implement

which are likely to affect developing countries and development cooperation objectives,

— having regard to the Presidency conclusions of the Brussels European Council of 16 and 17 June 2005,

— having regard to the World Bank's World Development Report 2006,

— having regard to the communication from the Commission to the Council, the European Parliament, the
Economic and Social Committee and the Committee of the Regions entitled ‘Proposal for a joint declara-
tion by the Council, the European Parliament and the Commission on the European Union Development
Policy “The European Consensus”’ (COM(2005)0311),

— having regard to the UN Millennium Declaration of 8 September 2000 defining the Millennium Devel-
opment Goals (MDGs) as criteria set by the whole international community with a view to the elimina-
tion of poverty,

— having regard to its resolution of 12 April 2005 on the role of the European Union in the achievement

of the Millennium Development Goals (MDGs) (4),

— having regard to its resolution of 6 July 2005 on the Global Call to Action: Making Poverty History (5),

— having regard to its resolution of 17 November 2005 on the proposal for a Joint Declaration by the
Council, the European Parliament and the Commission on the European Union Development Policy ‘The
European Consensus’ (6),

— having regard to Rule 45 of its Rules of Procedure,

— having regard to the report of the Committee on Economic and Monetary Affairs and the opinions of

the Committee on Development and the Committee on International Trade (A6-0022/2006),

A. whereas the role played by the Bretton Woods institutions has evolved since their inception, and their
strategic mission is to promote growth, development and financial stability; and whereas there is a need
to work towards an international monetary and financial system characterised by stability and solidarity,

B. whereas the individual Member States' weight in terms of their voting rights and quotas in the Bretton
Woods institutions no longer accurately reflects their relative weight, and whereas the role played by the
Community — notwithstanding the size of its contribution to the capital of those institutions — does
not entirely correspond to its weight in the world economy and in world trade,

(1) OJ C 112 E, 9.5.2002, p. 140.
(2) OJ C 74 E, 24.3.2004, p. 871.
(3) http://www.imf.org/external/np/omd/2005/eng/091505.pdf.
(4) OJ C 33 E, 9.2.2006, p. 311.
(5) Texts Adopted, P6_TA(2005)0289.
(6) Texts Adopted, P6_TA(2005)0446.

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C. whereas the above-mentioned Presidency conclusions of the Vienna European Council, which reaffirm
the IMF's role as the ‘cornerstone of the international monetary and financial system’, under the heading
‘Europe as a Global Player — Speaking with one Voice’ note that ‘it is imperative that the Community
should play its full role in international monetary and economic policy cooperation within fora like the
G7 and the IMF’ and call, firstly, for the European Central Bank (ECB), ‘as the Community body compe-
tent for monetary policy, [to] be granted observer status at the IMF board’ and, secondly, for ‘The views
of the European Community/EMU on other issues of particular relevance to the EMU [to] be presented
at the IMF board by the relevant member of the Executive Director's office of the Member State holding
the euro Presidency, assisted by a representative of the Commission’; and whereas Article 1 of the above-
mentioned Commission proposal of 9 November 1998 suggests that ‘in the context of EMU, the Com-
munity shall be represented at international level by the Council with the Commission, and by the ECB’,

D. whereas in particular the lack of coordination of the Community and eurozone, combined with their
representation fragmented among several constituencies, does not allow the Member States to exert a
degree of influence on the IMF's decisions commensurate with their economic weight,

E. whereas the IMF is responsible to its shareholders (namely, national governments) and it is the responsi-

bility of those shareholders to be accountable in turn to their electorate,

F. whereas the stabilisation policies implemented by the IMF are necessary to establish a solid basis for
growth in those countries, although they have not always achieved the objectives hoped for; whereas the
adjustment programmes which have been put in place require fuller explanation to ensure the involve-
ment of all national players and the monitoring of these programmes should be the subject of trans-
parent democratic supervision,

G. whereas, although it is hard to reconcile the principle of nations assuming their own responsibilities with
the sometimes numerous number of conditions placed on aid and debt relief measures, these conditions,
particularly those designed to bring about better governance, are necessary for the purpose of securing
transparency,

H. whereas the IMF has come to play an important role in developing countries and has had to adapt
accordingly; whereas, however, promoting development in the poorest countries calls for the mobilisa-
tion of new instruments to effectively reduce the stock of debt, as well as a search for innovative instru-
ments to fund development and combat poverty in the context of the MDGs; whereas such action calls
for a clear and more efficient division of roles among the IMF, the World Bank and the UN institutions
as well as a high level of coordination and cooperation,

I. whereas the above-mentioned Presidency conclusions of the Brussels European Council highlight the
importance of ‘tak[ing] account of development cooperation objectives in all policies that [the Com-
munity] implements which are likely to affect developing countries’ and of ‘taking into account the
social dimension of globalisation in various policies and in international cooperation’,

1. Considers that the IMF as an institution continues to play an important role in promoting balanced
global economic growth and exchange rate stability, in facilitating international trade and member countries'
ability to adapt to the global market place and in assisting member countries experiencing balance of
payment difficulties;

2. Welcomes the strategic review under way at the IMF; supports a re-orientation of IMF policies towards
emphasising its core mandate of stabilising global exchange rate fluctuations and as a lender of last resort
for countries experiencing serious balance of payment problems;

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3. Notes the profound changes which have taken place in the missions of the IMF since its inception and
which have been accompanied by less significant changes in its governance; notes that,
in spite of the
successive revisions of quotas and of the system for uniform allocation of a package of basic voting rights,
the allocation of capital and of voting rights has lagged behind other developments over the years; calls,
therefore, on the IMF, in the interest of its own legitimacy, to consider possible means of distributing the
quotas and voting rights within its governing institutions in such a way as to make them more representa-
tive of the international economic situation and to enable more appropriate weightings to be given to the
developing and emerging economies;

4.
Points out that the main factors preventing the developing countries from having a voice in the IMF
commensurate with the share of the world population they represent are the lack of votes on the Board of
Governors (African countries, accounting for 25 % of the membership, have just over 4 % of the vote) and
the lack of qualified human resources, technical and institutional capacity to participate in a meaningful way
in deliberations and decisions;

5. Notes that the IMF has also extended its recommendations by entering into the field of social and envir-
onmental policies, and that these are intrinsically linked to the structural policies; points out that macro-
economic stability is an essential condition for the proper development of such policies; advocates improved
coordination between the various institutions responsible for designing such policies;

6. Considers that, in view of the prerogatives of the IMF, its staffing should come to reflect more varied
backgrounds, while ensuring continued excellence, so as to permit the IMF to make a decisive contribution
to achieving the MDGs;

7. Notes that, due to the progressive opening-up of capital markets and the liberalisation of movement of
capital, it is difficult to avoid the occurrence of financial crises; therefore underlines the need for the IMF to
conduct systematic monitoring of all member countries;

8. Considers that the persistence of global imbalances in trade and exchange rates calls for a stepping-up
of the IMF's monitoring role, which is important both in predicting and helping to reduce financial
instability globally and in giving advice to individual countries on policies related to financial stability,
economic growth, exchange rates and reserve accumulation; considers that the IMF can only conduct
systematic monitoring and give advice on desirable actions to prevent the occurrence of financial crises if
member countries disclose their complete statistics concerning, for instance, monetary reserves and volume
of money in circulation, on a regular basis;

9.
Insists that the European positions in the EU representation within the IMF must be better coordinated;
calls on the Member States to work towards a single voting constituency — possibly starting as a euro
constituency, with a view, in the longer term, to securing consistent European representation, involving the
Ecofin Council Presidency and the Commission, subject to the European Parliament's scrutiny;

10. Notes that the IMF's adjustment policies have sometimes failed to prevent crises from becoming infec-
tious and recurring; regrets in this connection any failed efforts to promote economically-sound policies that
prevent crises; recalls that inflation is not the only economic problem in developing countries and that IMF
policies should be geared towards the objectives of macro-economic stability and sustainable growth;
suggests that conditionality should also be defined in the context of improved cooperation with the UN's
specialist institutions and coordinated between international donors;

11. Notes that to go down the path of sustainable growth, the existence of guaranteed macro-economic
policies is essential; to that end, affirms that macro-economic stability is not incompatible with the fair
distribution of growth;

12. Acknowledges that the conditions imposed by the IMF have in some cases been too rigid and not
always consistent with specific local circumstances; nevertheless emphasises the need to put loans to good
use, whilst considering the position of the recipient country's democratically-elected institutions;

13. Recognises the ongoing review of the conditions attached by the IMF to its loans to low-income coun-
tries; recommends that the review makes priority reference to poverty reduction as the goal of all IMF
lending to low income countries;

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14.
Stresses that the principle of partner-country ownership must be at the centre of development coop-
eration; therefore calls on the IMF to fully recognise, when considering conditions for lending, the priority
to be given to poverty eradication and not to make in any way the achievement of the MDGs more difficult;

15. Advocates a gradual, sequential and stable liberalisation of the developing countries' financial systems,
adjusted to take account of their institutional capacities, thus permitting the effective regulation and manage-
ment of movement of capital;

Supports the view that the IMF should increase its focus on analysis of financial and capital market

16.
developments and the implications for both domestic and global financial stability;

17. Urges that developing countries should not have to open up their markets fully and without restric-
tions to foreign imports and that they should be able to establish protection for certain industries for a
limited period so as to permit a steady development; urges European Executive Directors on the Board of
the IMF to make sure that remaining conditionalities do not pressure low income countries into unilateral
opening of markets outside the framework of WTO negotiations or impede their capacities to negotiate, in
the framework of WTO negotiations, of their own volition and on their own terms the degree of market
opening to which they are ready to commit; also calls on the IMF to ensure an adequate degree of flexibility
in implementing trade-related conditionalities so as to enable beneficiary countries to determine their own
degree of market opening; however considers that eventually full integration into the world market offers
considerable growth opportunities for developing, newly industrialised and industrialised countries;

18. Calls on the IMF to continue its efforts to increase transparency and build an institutional structure
conducive to its mission and the changing circumstances of international financial policy; regrets that NGOs
and national parliaments are insufficiently involved in the definition of conditionality; stresses that it is for
the national representatives to define and make fundamental economic choices such as the strategy for
development or for combating poverty;

19.
Emphasises the IMF's role in aligning European and national development policies aimed at tackling
poverty by means of a comprehensive approach based on the idea that trade and monetary policies are not
ends in themselves but tools for tackling poverty;

20. Calls on the EU Member States to use the existing constituency system to ensure that the constituen-
cies of which they are members forcefully promote a pro-development agenda based on reaching the MDGs
by 2015, and that their constituencies give special attention to the technical and institutional weakness of
the developing countries in the constituency and provide the necessary technical assistance to overcome
them;

21. Calls for better coordination and greater coherence between the policies of the IMF, the World Bank,
the WTO, the ECB, other international organisations and the European Union, in particular as regards the
instruments linking the various markets, such as the Integrated Framework,
the Trade Integration
Mechanism, the Poverty Reduction and Growth Facility (PRGF) and the recently adopted Policy Support
Instrument (PSI), in order to ensure that open-market policies have a positive impact on poverty reduction;
asks for more coherence between IMF programmes and the MDGs; draws attention in this context to the
ambivalence in the position of the IMF which, although it is responsible for only one very specific aspect of
public action, plays a leading, if not dominant, role in implementing the strategies pursued by all players;

Strongly believes that the transparency of the IMF and of the allocation of its funds should be

22.
increased through strengthened parliamentary control by the member countries of the IMF;

23. Welcomes the IMF's emphasis on improving the levels of education and health in developing coun-
tries; stresses that improving governance, combating corruption and efficient use of resources, remains the
surest way to reduce inequality of access to goods and to fundamental rights such as education and health;

24.
Insists that international financial stability can only be promoted if the reform of the IMF goes hand
in hand with a sustainable budgetary policy and a well-adjusted balance of payments in every member
country;

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25. Notes the striking contrast between the degree of pressure which the IMF can bring to bear on the
developing and transitional countries and its powerlessness to exert any significant influence on the policies
of the industrialised countries, whose budgetary policy and balance of payments fail in part to fulfil the
criteria established by the IMF and may therefore undermine international financial stability;

26. Welcomes the decision taken by the IMF and the World Bank to extend the experiment of the HIPC
(Heavily Indebted Poor Countries) Initiative; notes the perverse effects of the HIPC programmes and the
historical experiences of debt restructuring and debt cancellation; suggests that the IMF develop policies to
avoid new debt crises in future;

27. Notes the new Debt Sustainability Framework adopted in April 2005 by the IMF and the World Bank
with regard to low income countries; welcomes the fact that the new Framework aims to put debt at the
centre of the international financial institutions' decision-making process; regrets that the proposal as a
whole does not come close to addressing the problem of long-term, real sustainability in terms of creating
conditions for low income countries to attain the MDGs;

28. Welcomes the IMF's PRGF programme in general terms;

Supports the call by the UN Secretary-General at the 2005 High Level Dialogue on Finance for Devel-
29.
opment to redefine debt sustainability as the level of debt that allows a country to achieve the MDGs by
2015 without an increase in debt ratios, which requires greater complementarity between debt relief and
outstanding development financing requirements; regrets therefore that in the new Debt Sustainability
Framework for low income countries, the IMF continues to define debt sustainability essentially in terms of
export ratios (which is an unreliable predictor of debt sustainability for countries characterised by an
extreme vulnerability to shock and steep fluctuations in export earnings), that it lacks realistic assessments
of vulnerability and that there is no systematic analysis linking the benefits of the HIPC Initiative and the
extra funds needed to achieve the MDGs;

30. Welcomes the efforts made by the multilateral institutions to play their part in funding debt reduction
in the context of the agreement concluded by the G8, while recognising that this necessary participation
must not place these institutions in financial difficulties;

Encourages better cooperation between the IMF and the European Parliament and national parlia-
31.
ments, especially in developing countries, in order to strengthen transparency, democratic responsibility and
the legitimacy of the IMF and its policies, and requests the publication of more extensive minutes from the
IMF Executive Board;

Stresses the importance of regular contact between IMF Executive Directors and the national represen-

32.
tatives of their countries of origin;

Instructs its President to forward this resolution to the Council and Commission, and to the IMF, the

33.
UN organisations, the ECB and the IMF governors of the EU Member States.

P6_TA(2006)0077

Relocation in the context of regional development

European Parliament

resolution on relocation in the

context of

regional development

(2004/2254(INI))

The European Parliament,

— having regard to the 1989 Community Charter of Fundamental Social Rights of Workers and the asso-

ciated action programme,