C ON-TENE S CONTENTS LETTER OF TRANSMITTAL OVERVIEW Year Sees Swift Response to New Challenges of Globalized Markets; Financial Support for Members Rises to Record Levels THE GLOBAL ECONOMY Main Developments in the World Economy Economic Activity and Employment Consumer and Commodity Prices Financial and Foreign Exchange Markets External Balances, Financing, and Debt World Economic Outlook Global Situation Industrial Country Policies Developing Country Policies Policies in Economies in Transition International Capital Markets Turbulence in Emerging Capital Markets Spillovers from the Mexican Crisis Capital Flows to Developing Countries Recovery of Some Emerging Markets Major International Capital Markets Regulatory and Supervisory Issues Problems in Japan’s Financial Sector Fiscal Considerations in Policymaking Quasi-Fiscal Operations of Public Financial Institutions Aging Populations and the Fiscal Impact of Public Pension Plans Taxation and Unemployment Present and Future Role of the SDR THE FUND IN 1995/96 The Role of the Fund: Financing and Its Link to Surveillance Rationale for Fund Financing Future Need for Fund Resources Fund Surveillance Review of Policies Under the Madrid Declaration The Fund?’s Statistical Policy and Provision of Data for Surveillance Other Issues in Surveillance Progress Toward Economic and Monetary Union Capital Account Convertibility and Implications for Fund Policy ANNUAL REPORT 1996 CONTENTS Banking System Soundness and Macroeconomic Policy Governance Issues Data Dissemination Standards Establishment of the Special Standard Electronic Bulletin Board General Standard Article IV Consultations Industrial Countries United States Germany France United Kingdom Italy Smaller Industrial Countries Australia Austria Finland Developing Countries Argentina Botswana Mexico Mozambique Nyeria Pakistan Philippines Senegal Tunisia Economies in Transition Georgia Mongolia Russia Slovak Republic Ukraine Fund Support of Member Countries Member Countries’ Use of Fund Facilities Algeria Argentina Armenia ANNUAL REPORT 1996 CONTENTS Bosnia and Herzegovina Burkina Faso Cambodia Cameroon Costa Rica Céte dIvoire Dyibouti El Salvador Georgia Guinea Guyana Hungary Kazakstan Kyrgyz Republic Lesotho Former Yugoslav Republic of Macedonia Malawi Mauritania Pakistan Papua New Guinea Romania Russia Rwanda Senegal Sierra Leone Vietnam Yemen Zambia Analytical Issues in Fund Support Response of Investment and Growth to Adjustment Policies and Composition of Fiscal Adjustment and Growth Bilateral and Multilateral Aid Flows and Fund-Supported Programs Adapting Fund Facilities Emergency Financing Mechanism Fund Policy with Regard to Currency Stabilization Funds Fund Involvement in Post-Conflict Countries Enhanced Structural Adjustment Facility Debt Situation and the Role of the Fund Official Flows to Developing Countries Problems of Heavily Indebted Poor Countries ANNUAL REPORT 1996 CONTENTS Private Market Financing for Developing Countries International Debt Adjustment Fund Financial Operations and Policies Membership Fund’s Liquidity, Access Policy, and Borrowing Members’ Use of Fund Resources and Credit Outstanding Stand-By and Extended Arrangements Special Facilicies SAF and ESAF Fund Income, Charges, and Burden Sharing Overdue Financial Obligations Progress Under the Strengthened Cooperative Strategy Prevention Intensified Collaboration and the Rights Approach Remedial Measures SDR Transactions and Operations SDR Valuation and Interest Rate Basket SDR Transfers Pattern of SDR Holdings Technical Assistance and Training IMF Institute Fiscal Affairs Department Legal Department Monetary and Exchange Affairs Department Statistics Department Treasurer’s Department Bureau of Computing Services APPENDICES I. International Reserves II. Financial Operations and Transactions of the Fund III. Relations with Other International Organizations IV. External Relations V. Principal Policy Decisions of the Executive Board VI. Press Communiqués of the Interim Committee and the Development Committee VII. Executive Directors and Voting Power on April 30, 1996 VIII. Changes in Membership of Executive Board IX. Administrative and Capital Budgets, Staffing, and Organization X. Financial Statements BOXES Board of Governors, Executive Board, Interim Committee, and Development Committee . Fiscal Problems and Policies . SDR Seminar Addresses Several Issues . Initiatives to Strengthen Fund Surveillance . Initiatives in Openness . Fund Data Standards at a Glance . Fund Facilities and Policies AMMRUAL REPORT 1996 CONTENTS . Guidelines on Performance Criteria with Respect to Foreign Borrowing . The Emergency Financing Mechanism and Supplementary Borrowing . Guidelines for Fund Support for Currency Stabilization Funds . Operational Budget . The Fund’s Holdings of Gold . Designation Plan . The Evaluation Function in the Fund . Departments of the Fund and Their Major Responsibilities TABLES . Overview of the World Economy . Selected Economies: Current Account Positions . The Special Data Dissemination Standard: Coverage, Periodicity, and Timeliness . Article [TV Consultations Concluded in Financial Year 1996 . United States: Selected Economic Indicators . Japan: Selected Economic Indicators . Germany: Selected Economic Indicators . France: Selected Economic Indicators . United Kingdom: Selected Economic Indicators . Italy: Selected Economic Indicators . Canada: Selected Economic Indicators . Australia: Selected Economic Indicators . Austria: Selected Economic Indicators . Finland: Selected Economic Indicators . Argentina: Selected Economic Indicators . Botswana: Selected Economic Indicators . China: Selected Economic Indicators . Colombia: Selected Economic Indicators . Cote d’Ivoire: Selected Economic Indicators . India: Selected Economic Indicators . Indonesia: Selected Economic Indicators . Israel: Selected Economic Indicators . Korea: Selected Economic Indicators . Mexico: Selected Economic Indicators . Mozambique: Selected Economic Indicators . Nigeria: Selected Economic Indicators . Pakistan: Selected Economic Indicators . Peru: Selected Economic Indicators . Philippines: Selected Economic Indicators . Senegal: Selected Economic Indicators . Tunisia: Selected Economic Indicators . Georgia: Selected Economic Indicators . Mongolia: Selected Economic Indicators . Poland: Selected Economic Indicators . Romania: Selected Economic Indicators . Russia: Selected Economic Indicators . Slovak Republic: Selected Economic Indicators . Ukraine: Selected Economic Indicators . Selected Financial Indicators . Arrears to the Fund of Countries with Obligations Overdue by Six Months or More ANNUAL REPORT 1996 vit CONTENTS 41. Arrears to the Fund of Countries with Obligations Overdue by Six Months or More, by Type and Duration 42. Change in SDR Valuation Basket 43. Transfers of SDRs 44. Technical Assistance Delivery CHARTS . World Indicators . Selected Industrial Countries: Real GDP Growth . Developing Countries: Real GDP Growth . Selected Countries More Advanced in Transition: Inflation . Selected Countries Less Advanced in Transition: Inflation . Developing Countries and Countries in Transition: External Debt and Debt Service . Fund’s Liquidity Ratio, 1982-96 . General Resources Purchases and Repurchases, Financial Years Ended April 30, 1982-96 9. Total Fund Credit Outstanding to Members (Including Trust Fund, SAF, and ESAF) 10. Composition of Technical Assistance 11. Cost of Major Activities 12. International Monetary Fund: Chart of Organization 13. Financial Year 1996 Capital Budget and Five-Year Plan GLOSSARY OF ABBREVIATIONS vit ANNUAL REPORT 1996 eS evasa