2002 Annual Meetings of the IMF and the World Bank Group
September 28, 2002
Documents Related to September 28, 2002 IMFC Meeting
United States and the IMF
Statement of U.S. Treasury Secretary Paul H. O'Neill
International Monetary and Financial Committee Meeting
Washington D.C., September 28, 2002
It's a pleasure to be here with all of you today to renew our commitments to action to support a strong global economy and to help the IMF in its pivotal role in eliminating the flow of funds that support terrorism, improving crisis prevention and resolution, and meeting the challenges of development.
Promoting global growth
North America continues to be the engine of global recovery. After a shallow downturn, the U.S. economy is firmly rebounding, due to timely fiscal and monetary policy action. Further, the United States is vigorously putting measures in place to improve corporate disclosure, enhance corporate accountability, and strengthen the independence of auditing. It is critical to the health of the world economy that all industrial nations implement the sound macroeconomic policies and structural reforms necessary to sustain robust domestic demand and create multiple engines of global growth.
Many emerging markets throughout the world have worked hard to strengthen their economic policy frameworks in recent years and are now reaping the fruits of their efforts. Growth in Asia continues to rebound from the crisis of the late 1990s and central and eastern Europe is posting solid growth for the third consecutive year. Many countries in South America, however, face uncertainties. Here, the international community stands ready to support those that are working to improve economic performance and restore robust growth. My recent trips to South America, Central Asia and Africa confirmed my strong conviction that trade liberalization is critical for increasing productivity, accelerating growth, and alleviating poverty. I urge all countries to join the United States in a spirit of cooperation as we seek to make substantial progress in the Doha Development Agenda.
Eliminating the flow of funds that finance global terror
The fight to eliminate terrorist financial flows is a key global challenge. We have made significant progress, but the war is not won. The United States commends the welcome actions taken by the IMF and the World Bank to move forward on comprehensive assessments of members' compliance with anti-money laundering and terrorism financing principles, based on the FATF recommendations. We will support FATF's endorsement of this approach at the FATF Plenary in early October and we will then look forward to the rapid implementation of the pilot program to assess country compliance with this standard. The United States would like to be an early participant in this program. This initiative is now coming close to being implemented in a practical way. Clearly it is even more important today than it was earlier.
Crisis prevention and resolution
Preventing crisis is the first order of business for the IMF. I strongly believe the IMF will perform this duty best when it is focused on those areas most central to its expertise. The United States also strongly commends the Fund's work to enhance transparency, promote the use of codes and standards, strengthen its financial sector work, and sharpen surveillance. The work underway to strengthen debt sustainability analysis, better understand national balance sheets, and reinforce the robustness of economic projections is critical to crisis prevention.
Despite our best efforts, crises will happen and we must be better prepared to facilitate their resolution. An improved sovereign debt restructuring process will help reinforce discipline on official sector lending because the existence of a more orderly and predictable restructuring process, when restructuring is inevitable, will reduce uncertainty during times of crisis. The United States strongly welcomes the significant progress being made on the contractual approach to sovereign debt restructuring. We are particularly encouraged by the broad support expressed by both borrowers and creditors for the implementation of this approach. In addition, we strongly support the continued pursuit of the statutory approach.
The IMF is now conducting its routine five-year review of the adequacy of quotas. Limiting official resources is a key tool for increasing discipline over lending decisions. Further, the IMF's liquidity position is extremely strong. There is no need to increase IMF quotas.
Supporting low-income countries
Around the globe, I have seen numerous examples of the resourcefulness and ingenuity of people who are struggling to meet their basic human needs and realize their potential. Every human being has the potential to succeed, and it's up to the leaders of every nation to create an economic framework that provides individuals the opportunity to meet their potential.
Rising incomes and living standards are the lynchpin to long-term economic success. Only leaders at home can create lasting systems that invite domestic and foreign investment—the key drivers to creating jobs and rising incomes. The United States is eager to support nations that are working to create an environment for growth and prosperity, by ruling justly, investing in people and expanding economic freedom.
The United States will fulfill its commitment to HIPC debt relief, including through contributions to the HIPC Trust Fund, but debt relief alone is no guarantor of future success. HIPC nations need to create an economic foundation for job creation and rising incomes, and the donor community, including the IMF and World Bank need to work with them to avoid excessive borrowing that will create a future unsustainable debt burden.
For our part, we must avoid creating the next generation's HIPC problem. We must encourage leaders to create the conditions for growth. President Bush has proposed an annual $5 billion Millennium Challenge Account, to award grants to nations that are following the path to success. We have also worked hard to have the World Bank and African Development Bank provide significant financing on a grant basis—particularly to the HIPCs. In sum, reinforcing good policies and insisting that grants and other resources achieve real measurable results, are crucial to ensuring that HIPC is not temporary relief but an ingredient in permanent success.