Statement of the G-7 Finance Ministers In Tokyo
Statement of the G-7 Finance Ministers Tokyo Meeting
(Cites need for balanced growth among industrial nations)(2080)
The Group of Seven (G-7) major industrialized countries' finance ministers and central bank governors have reiterated the need for a more balanced pattern of economic growth among the seven nations and noted that Japan has to carry forward announced measures to ensure a "domestic demand-led" recovery.
Japan's economy, the second largest after the United States, "has shown some encouraging signs of recovery, although a sustained recovery remains to be established," the G-7 ministers said in a statement issued after their January 22 meeting in Tokyo.
Japanese authorities will continue to implement already-announced budgetary measures to provide the stimulus to "ensure domestic demand-led growth," the statement said. It added that the Japanese "reiterated their intention, in the context of their zero interest rate policy, to provide ample liquidity to ensure that deflationary concerns are dispelled."
The statement also welcomed the reaffirmation of Japanese monetary authorities to "conduct policies appropriately in view of their concern, which we share, about the potential impact of yen appreciation for the Japanese economy and the world economy." There have been concerns that a yen appreciation could stifle Japan's tentative recovery. The G-7 will "monitor developments in exchange markets and cooperate as appropriate," the statement said.
While the prospects for growth in the major industrialized economies and the larger world economy have improved, "the challenge remains to secure a more balanced pattern of growth among our economies that is important to sustaining the expansion," the statement said. In recent years the U.S. economy has grown very fast, while the European and Japanese economies have expanded much more slowly. In 1998, Japan's economy contracted by 2.8 percent, making it the poorest performer among the seven.
The statement noted continued strength in the U.S. and Canadian economies, growth in the United Kingdom and recovery in the other European economies.
The statement also noted progress since the G-7 Summit in Cologne last June in implementing reforms to strengthen the global financial and monetary systems as well as efforts to combat financial crimes, poor regulatory standards and harmful tax competition.
The G-7 also reaffirmed their commitment to the World Bank/International Monetary Fund (IMF)-managed Heavily Indebted Poor Country (HIPC) debt relief initiative. The statement welcomed recent statements that as many as 11 countries could benefit from HIPC debt relief by early spring.
The January 22 meeting was the first of four regularly scheduled meetings of the G-7 finance ministers and central bank governors held each year. The next scheduled meeting will be just before the IMF and World Bank spring meetings in mid April.
Following is the text of the G-7 statement as made available in Washington.
Statement of G-7 Finance Ministers and Central Bank Governors January 22, 2000 Tokyo
We, the Finance Ministers of the G-7 countries, the Central Bank Governors of Canada, Japan, the United States, and the United Kingdom, the Euro-11 Presidency, and the President of the European Central Bank, met today with the Managing Director of the International Monetary Fund to review recent developments in the world economy. The Finance Ministers and Central Bank Governors of the G-7 countries reviewed the progress made towards strengthening the international financial architecture and implementing the HIPC Initiative.
We expressed our deep gratitude to Mr. Camdessus for his thirteen years of valuable service as the IMF's Managing Director and for his contributions to our meetings.
Developments in the World Economy
We see improved prospects for non-inflationary growth in the major industrial economies and the world economy as a whole. The challenge remains to secure a more balanced pattern of growth among our economies that is important to sustaining the expansion. We agreed on the importance of directing both macroeconomic and structural policies in all our countries at this objective, with particular emphasis on taking advantage of the investment opportunities created by new technologies.
Open and competitive international markets for trade and investment are essential for efficient global resource allocation, sustainable growth, stability, and shared prosperity. We reaffirm our commitment to achieving further trade liberalization through the launching of a new multilateral trade round at the earliest opportunity.
We reemphasized our commitment to maintain or create conditions for sustainable growth in each country. In this context, we stressed the importance of continued cooperation among the G-7 countries.
-- In the United States and Canada, economies are showing continued strength, while unemployment and inflation are historically low. The aim of policies now is to preserve conditions conducive to sustainable growth by maintaining strong fiscal conditions, prudent monetary policy, and, in the United States, increasing national saving.
-- In the United Kingdom, growth has strengthened. Labor market activity has remained robust, and interest rates have risen preemptively in recent months in the face of stronger domestic demand. Policies should continue to aim at meeting the inflation target and sustaining growth and employment.
-- Recovery of growth is well under way in the euro area. With the unemployment rate falling though still high in many countries, appropriate macroeconomic and structural policies, aimed at strengthening economic growth, increasing employment and expanding investment opportunities, will continue to be important.
-- Japan's economy has shown some encouraging signs of recovery, although a sustained recovery remains to be established. In these circumstances, the Japanese authorities are implementing the second supplementary budget and announced FY2000 budget proposal maintaining stimulus to ensure domestic-demand-led growth. They reiterated their intention, in the context of their zero interest rate policy, to provide ample liquidity to ensure that deflationary concerns are dispelled. Measures to further strengthen the financial system and structural reforms will continue to be important.
We discussed developments in our exchange and financial markets. We welcomed the reaffirmation by the Japanese monetary authorities of their intention to conduct policies appropriately in view of their concern, which we share, about the potential impact of yen appreciation for the Japanese economy and the world economy. We will continue to monitor developments in exchange markets and cooperate as appropriate.
Emerging Market Economies
In the emerging market economies, recent economic developments have been generally encouraging, and market sentiment has improved. We welcome the earlier and stronger than expected economic recovery in many Asian nations. Along with appropriate macroeconomic policies, full implementation of reforms in the financial and corporate sectors are crucial preconditions for restoring strong sustainable growth and avoiding future financial instability. In Latin American countries, there are welcome signs of improved economic conditions in the region as a whole. These countries need to persist with sound macroeconomic policies and the deepening of economic reforms, including strengthening of the financial sector, which are essential in paving the way for economic recovery and full restoration of market confidence.
We welcome favorable developments in some areas of the Russian economy, reflecting improved external factors. We urge the Russian authorities to intensify macroeconomic stabilization and economic reforms which are necessary for sustained economic growth. These include enhanced transparency, budgetary and financial accountability, structural and institutional reform, and combating corruption and money laundering.
Strengthening the International Financial and Monetary System
We reviewed with satisfaction the progress that has been made since our last meeting in September to strengthen the international financial architecture in line with the G-7 Finance Ministers' Report at the Cologne Summit last June.
-- We welcome the steps taken to transform the Interim Committee into the permanent "International Monetary and Financial Committee".
-- We note that the first meeting of the G-20 Finance Ministers and Central Bank Governors was successfully held in Berlin in December.
-- We look forward to recommendations by the Financial Stability Forum (FSF) this spring on highly-leveraged financial institutions, capital flows, and offshore financial centers. We note that the Task Force on the Implementation of Standards and Codes and the Study Group on Deposit Insurance Schemes were established by the FSF.
-- We agree that we must continue to focus on encouraging broader implementation of internationally agreed codes and standards and on monitoring compliance with the IMF assuming a leading role by virtue of its surveillance function.
-- We are encouraged by the deepening of discussions being held at the IMF board on wide-ranging issues to strengthen international financial architecture.
We will continue to work to achieve solid progress in implementing the wide range of reforms endorsed at the Cologne Summit, including ways to ensure private sector involvement in forestalling and resolving crisis. We will also continue to work together on measures to strengthen the functioning of the IMF to ensure that its role reflects the changing global financial landscape. In that context, we will examine appropriate measures, including a greater focus on promoting the flow of information to markets and reducing liquidity and balance sheet risks, and a comprehensive review of IMF facilities. We also agreed to consider in our future work the role of Multilateral Development Banks in the context of changing global conditions.
Actions against Abuse of the Global Financial System
In order to secure the benefits of the global financial system we must ensure that its credibility and integrity are not undermined by crime, poor regulatory standards and harmful tax competition.
-- For the prevention of money laundering, we urge the Financial Action Task Force (FATF) to complete its identification of non-cooperative jurisdictions expeditiously and, in this context, we will coordinate our work with other ministries when appropriate.
-- We remain concerned about offshore financial centers and tax havens which undermine international standards of financial regulation and which are shelters to avoid or evade payment of tax. We strongly support the work being done by the FSF and the OECD's Forum on Harmful Tax Practices, as well as the cooperative efforts of the OECD's Committee on Fiscal Affairs (CFA) and the FATF. We urge the OECD's CFA to bring a rapid conclusion to its work on bank secrecy.
-- The benefits and opportunities of the international financial system can also be undermined by corruption. In this regard, we support the work being done in various fora on anti-corruption measures.
-- We look forward to the review in the IMF and World Bank on ways to strengthen safeguards on the use of their funds. We expect the international financial institutions (IFIs) to also strengthen governance and anti-money laundering measures in programs with member countries.
-- We commit ourselves to tackling these issues, in close coordination with relevant multilateral fora, and will report on the progress at the upcoming Summit meeting.
Enhanced HIPC Initiative
We reaffirmed our commitment to the enhanced HIPC (Heavily Indebted Poor Country) Initiative and its speedy implementation. While we welcome the considerable progress made so far, notably in identifying and securing resources for financing of the HIPC Initiative, further steps need to be taken to secure the practical implementation of the Initiative to provide faster, broader and deeper debt relief.
-- All IFIs are encouraged to be actively engaged in the Initiative, maximizing the use of their own resources in meeting their costs.
-- Some important bilateral financial contributions to the Initiative, including those to the HIPC Trust Fund, still require legislative approval.
-- We urge bilateral creditors to take action to deliver their proportional share of debt relief under the Initiative as agreed at the last Annual meetings.
-- Countries seeking assistance under the Initiative are urged, in cooperation with the IFIs, to begin the participatory process of developing poverty reduction strategies, in the context of a sound policy framework, with clear monitorable performance targets, including emphasis on transparency, accountability, and good governance.
-- We welcome the recent statement of World Bank and IMF that up to eleven countries could benefit from HIPC debt relief by early spring. We urge the IFIs to continue to work with the HIPC countries to ensure that three quarters of the eligible countries have reached their decision point under the Initiative by the end of 2000.
We discussed issues to be taken up at the Fukuoka Finance Ministers' Meeting which will be held in July as a part of the Kyushu-Okinawa Summit. These issues may include, in addition to a follow-up on progress in the reform of the international financial architecture and the HIPC initiative, the opportunities and challenges posed by further advancement of information technology and globalization and their implications for our public policies. We will start preparatory work for the Fukuoka Meeting.
(Distributed by the Office of International Information Programs, U.S. Department of State.)