Rome, 5-6 December 2001

Distinguished Directors,

I would now like to summarize our deliberations briefly and highlight the decisions taken at this Session.

The Executive Board began its consideration of financial matters with a review of the Status of Contributions to the Fifth Replenishment of IFAD’s Resources (document EB 2001/74/R.2 and addenda), noting that the Instruments of Contribution deposited and payments made against pledges not supported by Instruments of Contribution amount so far to 64.2% of total pledges.

Members who had not yet done so were urged to deposit their Instruments of Contribution. Those who were overdue in the payment of the first instalment of their contribution were asked to take action as soon as possible. In this regard, the Board welcomed the announcement of the Government of Denmark’s intention to encash the balance of its promissory note paid under the Fourth Replenishment, and the payment of one third of its contribution to the Fifth Replenishment this year.

The Board reviewed the Report on IFAD’s Investment Portfolio for the Third Quarter of 2001 (document EB 2001/74/R.3), noting the returns for the nine-month period ending 30 September as well as the returns for October and November.

There was an in-depth discussion on IFAD’s Investment Policy (document EB2001/74/R.4/Rev.1) in light of the seminar held the day before the Board Session. During the discussions at the seminar, while different views were expressed on the central issue of exposure to equities, a broad consensus was reached to reduce investments in equities to a level of 10% of the investment portfolio.

This process of consultation has resulted in the formation of a collective judgement on this complex and sensitive matter and allows us to move on to other issues of importance to the institution. I must once again thank you all for the valuable and constructive contributions you have made in this process.

The transition to the new investment policy will have to be carefully managed. We will seek expert external advice during the process in order to minimize, and if at all possible avoid, losses. We expect to have the new policy in place by the beginning of the Sixth Replenishment, that is by 2004. During the transition period, we will realize profits when they arise and, of course, not reinvest dividends in equities.

We will report to the Board at its April Session on details of the modalities of the transition and on the progress made in carrying out this process. We will also provide you with more information and analysis on the question of raising the minimum asset quality of the portfolio.

The Resources Available for Commitment at this Session were considered, and the Board approved the use of the Advance Commitment Authority (ACA) for an amount of up to USD205.8million (document EB 2001/74/R.5 and addendum). The Board noted that, with the ACA amount carried over from September, and taking into account the USD 62 million inflows expected by year’s end, there would be an ACA utilization at the end of December 2001 of approximately USD160 million. Directors were assured that management will continue to monitor closely the use of the ACA.

The Executive Board approved a plan for the Settlement of Arrears by the Republic of Sierra Leone (document EB 2001/74/R.6) amounting to USD 2.5 million, with instalments to be repaid within November 2006. The approval of this plan will allow the Fund to reactivate its lending portfolio in Sierra Leone.

The Board had a very comprehensive discussion on the draft Strategic Framework for IFAD2002-2005 (document EB 2001/74/R.36) with many thoughtful comments made on the document. Management welcomed the importance that Directors place on the Strategic Framework and have taken note of all comments. They will be reflected in revisions to the document.

From the discussion there emerged a broad consensus on three elements. First, that we amend this document in the light of the comments of the Board Directors and bring it to the roundtable discussions on the regional strategies at the forthcoming Governing Council. Second, that there was a clearly expressed desire for a workshop or seminar in which the Strategic Framework could be more fully discussed. We will investigate the possibility of holding such a seminar early in 2002. Third, there was clear recognition that the Strategic Framework is closely linked to the Sixth Replenishment and will be one of the basic documents for the Consultation.

The Executive Board reviewed the Progress Report on the Process Re-Engineering Programme and noted the change management was making in its overall focus in aligning it to the Fund’s Strategic Framework for 2002–2005. Directors welcomed this initiative. The Board recommended that a substantive progress report be submitted to the Twenty-Fifth Session of the Governing Council. It also recommended that the April Session of the Board be presented with a report indicating the workplan and corresponding budget for the Programme as well as its linkage to the Strategic Framework.

The Board was presented with the annual Progress Report on the IFAD V: Plan of Action (2000-2002) outlining the implementation status of the plan as well as the challenges it presents and the constraints, with respect to both human and financial resources, that are encountered (document EB 2001/74/R.27). Directors expressed their appreciation for the efforts made and for the progress achieved.

With regard to the Programme of Work and Administrative Budget of IFAD for 2002 (document EB 2001/74/R.7/Rev.1), the Executive Board approved a programme of work of USD450million in nominal terms, subject to review during the course of next year. It also agreed that the critical element in deciding whether to adjust the work programme level would be the resource position, including a possible shortfall in investment income, considered in the context of the use of ACA in 2002. While management shares the view expressed by several Directors that a larger lending level would be desirable, it should be noted that the current resource position of the Fund dictates cautious planning in this respect.

The Board further approved a total Programme Development Financing Facility (PDFF) of USD26.7million for 2002 and recommended that the proposed administrative budget for 2002, of USD42.3 million, inclusive of the contingency but excluding amounts transferred to the PDFF, be submitted to the Governing Council for approval. Finally, the Executive Board decided to delegate authority to the President of IFAD to reallocate funds among budget categories on the condition that such amounts do not exceed 10% of each approved category.

With respect to the document for the Fund’s Programme of Work and Administrative Budget, I would like to assure Directors of two important points raised during the Board discussions. First, the document that will be submitted to the Governing Council in February will have language on the regional strategies reflecting comments made by some of the Directors. Second, I would like to commit myself to ensuring that next year’s document does reach Directors earlier. I also intend to review the internal process currently being used in compiling the information contained in this document.

Lastly, during the discussions held on the Fund’s regional strategies, the Board was informed that IFAD had participated in the conference on the preparations for the reconstruction of Afghanistan, held in Islamabad from 27 to 29 November. Directors expressed their full satisfaction in IFAD’s having taken the initiative to participate in this endeavour. They particularly welcomed the agreement reached among the three Rome-based United Nations agencies to pool their resources, expertise and experience for the rehabilitation of the smallholder sector of Afghanistan, within the overall framework sponsored by the Asian Development Bank, the United Nations Development Programme and the World Bank. I once again assure Directors that IFAD will play its role in this important venture. In so doing, it will look to its Member States for their support.

The Executive Board endorsed the Report of the Audit Committee (document EB2001/74/R.8) presented by its Chairperson and noted that a report will be presented to the April Board on the issues and options with respect to the expansion of the Audit Committee’s mandate.

The Executive Board decided to submit to the Governing Council a draft resolution on the Establishment of the Consultation on the Sixth Replenishment of IFAD’s Resources (document EB2001/74/R.9). There was an overwhelming commitment to start the Replenishment negotiations and ensure that the negotiations are completed in a timely way to allow the Sixth Replenishment to become effective on schedule.

In this respect, Directors provided a number of useful suggestions regarding the preparations and documentation that will be needed. I appreciate very much your comments and advice on the criteria for the Replenishment negotiations and issues such as IFAD’s resource position and the use of ACA. We will keep all these elements, as well as the usefulness and importance of the Strategic Framework in this regard, in mind as we prepare for the Consultation.

The Board approved the contribution to the reduction of Chad’s debt to IFAD under the Debt Initiative for Heavily Indebted Poor Countries and noted the annual review of the progress made in the implementation of the Debt Initiative (document EB 2001/74/R.10). Directors also complimented the Fund on its active pursuit of identifying funding possibilities and modalities for IFAD’s participation in this Initiative. I would like to take this opportunity to thank those of our Member States that have already decided on their own methods to contribute to our participation in the Initiative.

The Executive Board considered the Country Strategic Opportunities Papers (COSOPs) for the Republics of India and Mozambique (respectively documents EB 2001/74/R.11 and EB2001/74/R.12/Rev.1) and approved 12 programmes and projects: six in Africa; three in Asia; two in the Latin America and the Caribbean region; and one in the Near East and North Africa region. The project loan for Nepal was formulated and approved under the flexible lending mechanism. The Board also approved the extension of the loan effectiveness date of the Forest Resource Management Project in Zambia and two grant proposals.

The Board considered the documents on Planned Project Activities for 2002 (document EB2001/74/R.26 and addenda) and decided to review the COSOP for Egypt and a regional COSOP for Central Asia at its Seventy-Fifth Session.

It then took note of the Progress Reports on the Global Mechanism of the United Nations Convention to Combat Desertification (document EB 2001/74/R.30) and on the Popular Coalition to Eradicate Hunger and Poverty (document EB 2001/74/R.29). The Board agreed that both reports be submitted to the forthcoming Session of the Governing Council. It also appreciated the Progress Report on the Belgian Survival Fund Joint Programme (document EB 2001/74/R.31/Rev.1).

Directors were most supportive of the new format for the Governing Council as presented in the Draft Programme of Work for the Twenty-Fifth Session of the Governing Council (document EB2001/74/R.32). They echoed management’s hope that the panel and roundtable discussions will be conducive to the exchange of views on the rural dimension of financing development and the regional strategies.

Under Other Business, the Board elected Mr Rudolf Huber of Germany as Member, and MsSeija Toro of Finland and Mr Yohannes Tensue of Eritrea as Alternate Members, to represent the Fund’s Governing Council on the IFAD Staff Pension Committee (document EB 2001/74/R.33).

Finally, the Board approved the disclosure, on IFAD’s public website, of the documents approved at the current Session.

Before I close this Session, I would like to bid farewell to the Representative for India, Ms Neela Gangadharan. We have very much appreciated her contribution to our work, and I have personally benefited greatly from her deep knowledge and experience, and her very good judgement. On behalf of the Board, I would like to thank Ms Gangadharan and wish her well.

Our thanks and gratitude go also to Mr A.K.M. Khairul Alam, the Representative for Bangladesh, whose term of office on the Board has come to an end. Mr Alam has made an excellent contribution to our work, and he has also played a very supportive role for IFAD’s programmes in Bangladesh. Our best wishes go to him as well.

Distinguished Directors,

We have dealt with various issues in this Session and we have considered many aspects important to IFAD. Not the least of these are the staff and managers who ensure the smooth running of its operations. I would therefore like to end today on a note pertaining to the Fund’s management. As I mentioned in my opening statement yesterday, we are well into the recruitment process of the senior management team. Given that this exercise proceeds on schedule, this Session of the Board will be the last in which John Westley and Jean-Louis Lawson participate as part of IFAD’s management team.

During my eight months as President of IFAD, I have greatly valued their advice and benefited enormously from their rich experience.

I do not think this meeting provides us with the appropriate time or place with which to pay each of these colleagues the tribute due to them. I believe the work and dedication they have provided the Fund merits a special event that I very much look forward to organizing and to which Directors will naturally be invited.

For the moment let me just thank you, John and Jean-Louis, for the commitment and collaboration you have each shown the Fund and me during this period.

Let me also take this occasion to announce that Mr Christian Codrai, who has served IFAD for many years – and whom I am sure is well known to you all – has been recently appointed as the Fund’s General Counsel.

Ladies and Gentlemen,

Let me now wish each of you a good year’s end, an even better start to the New Year and a safe return home. Thank you very much for your very active participation.