The Annual Report of the Executive Directors for the fiscal year ending April 30, 1951 indicated a general improvement in balance of payments, world production, and trade, although serious dollar shortages still existed in some countries. The outbreak of hostilities in Korea, however, and the expanded rearmament programs had produced shortages of raw materials and skilled labor, rises in prices and changes in the terms of trade of many countries. The report stressed the importance of using monetary and fiscal measures as well as measures of direct control to combat inflationary tendencies in order to prevent “situations of latent inflation”. It was believed that the present pattern of world payments was not a stable one and that it would become so only following an increase in production outside of the United States and a better relationship between prices of primary and industrial goods.