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Summers Statement at Post-G-7 Press Conference

Summers Statement at Post-G-7 Meeting Press Conference

(G-7 favors balanced growth; U.S. dollar policy unchanged)(1020)

U.S. Secretary of Treasury Lawrence Summers says that continuation of the tentative global economic recovery cannot be taken for granted and will require a "proactive" policy.

In a statement issued after the January 22 Group of Seven (G-7) major industrialized countries finance ministers and central bank governors meeting in Tokyo, Summers said, "we must all seize this moment of opportunity to create an environment for strong and more balanced growth across all of our economies."

Summers noted that the G-7 statement, issued after the meeting, cited the need for "a more balanced pattern of growth" among the seven countries. The U.S. economy has expanded very strongly in recent years while Europe and Japan have lagged behind. U.S. authorities have sought to encourage the other countries to take steps to allow growth to resume.

On exchange rates, Summers said the U.S. policy of supporting a "strong dollar" as in the interest of the United States "remains unchanged." He added that the G-7 also supported the Japanese monetary authorities' reaffirmation of their readiness 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."

Following are terms and acronyms used in the text:

-- G7: Group of Seven

-- G20: Group of Twenty

-- IMF: International Monetary Fund

-- OECD: Organization for Economic Cooperation and Development

Following is the text of Summers' statement as made available in Washington.

(begin text)



Let me begin by saying a few words about today's meeting, and then I will be happy to answer questions.

Our discussion today essentially divided into two parts: our review of global economic conditions and prospects; and the broad agenda for international financial reform.

First: Achieving Sustainable Growth in the Global Economy

With the maintenance of a strongly supportive macro-economic environment, we are now seeing improved prospects for global growth. At the same time, we all recognize that continued improvement is not inevitable, and will depend crucially on proactive policy. At a time of dramatic advances in technology, we must all seize this moment of opportunity to create an environment for strong and more balanced growth across all our economies.

In view of the importance of this point I would like to quote in full the formulation in paragraph three of the Statement:

"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 so 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."

As far as exchange rates are concerned, let me quote what we said in the Statement:

"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."

Let me also note that our policy with respect to the dollar remains unchanged: a strong dollar is in the interest of the United States.

Second: International Financial Reform Going Forward

We also talked about our broad agenda for international financial reform going forward. Let me highlight three areas that are especially important to us:

First, on the reform of the international financial architecture, we have made real progress since our meeting in September, including a successful inaugural meeting of the G-20 Finance Ministers and Central Bank Governors in Berlin in December. Obviously what is most important now is translating the consensus that has been reached into real change: for example, with regard to broader implementation of internationally agreed codes and standards, and working to find the right ways to ensure private sector involvement in forestalling and resolving crises.

In this context, we also agreed on the importance of measures to strengthen the functioning of the IMF to make sure that it is better able to meet the challenges of the 21st century. We agreed that there was a particular need for a greater focus on promoting the flow of information to markets and reducing liquidity and balance sheet vulnerabilities, and a comprehensive review of IMF facilities. In addition, we agreed to expand our discussions to include an examination of how the role of Multilateral Development Banks ought to evolve in a changing global environment.

Second, implementation of the HIPC (Heavily Indebted Poor Country) Initiative. We agreed that countries seeking relief under the Initiative should move quickly to put in place the more participatory process for developing national poverty reduction strategies that we have supported in this context. This will be crucial for meeting the target we set today, of three-quarters of the eligible countries qualifying for relief under this initiative by the end of 2000.

Third, we agreed that a priority for the Summit would be stepping up the international effort to combat financial crime, which poses a growing threat to the credibility and integrity of the international financial system. Especially important will be the Financial Action Task Force (FATF) moving quickly to complete its identification of non-cooperative jurisdictions; greater progress in implementing the OECD Anti-Bribery Convention; and continued IMF and World Bank efforts to strengthen governance and anti-money laundering safeguards in their programs with member countries.

Let me conclude by noting that we all expressed our deep gratitude to Managing Director Camdessus for his thirteen years of valuable service as the IMF's Managing Director and for his contributions to these G-7 meetings.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State.)



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