Anne O. Krueger
First Deputy Managing Director
International Monetary Fund
Addressing delegates at the Fifth WTO Ministerial Conference in Cancún, Mexico this week, the IMF’s Anne Krueger offered support for the negotiations. She said a successful conclusion to the Doha Round is vital in order to maintain the momentum established by earlier trade rounds, and would provide a boost for the world economy as a whole.
The Executive took the opportunity to announce a new trade initiative to be undertaken by the IMF. Specifically, the Fund proposes to make financial assistance available to developing countries that face the prospect of a challenging adjustment to the impact of multilateral trade reform.
She said, *”This initiative will complement the very active program of technical assistance and policy advice we offer our members on a broad range of trade policy issues. It is specifically tailored to address temporary external imbalances that might result from the multilateral trade reforms we all believe are ultimately desirable.
“Under this proposed initiative, we would commit to provide financial support in the context of new Fund-supported programs, or existing programs, to those members that face a net negative impact on the balance of payments in the near term from the effects of the Round.
“And we are prepared to offer additional financial help in those circumstances where the actual impact turns out to be greater than anticipated.”*
The IMF does not believe these costs are likely to be large, even for the small number of countries affected. It says the proposal is designed as a kind of contingent insurance, to reassure those countries that are participating in the multilateral trade round. *”They will have access to additional financial help in addressing any near-term transitional costs that might, in some cases, accompany the multilateral trade reforms. These will, of course, have substantial positive economic payoffs over time.”*
The proposal has been presented to the IMF Board in general terms, and Ms. Krueger says that it is very supportive of this initiative. The IMF expects to consult closely with the Director General of the WTO and the Secretariat as it develops the details of the proposal, a fleshed-out version of which is expected to be presented to the Fund’s board in the coming months.