Transcript of the G-24 Press Conference
September 20, 2003
Saturday, September 20, 2003 Deira Room, 3:15 p.m.
IMF Staff - Good afternoon, ladies and gentlemen, I am Gita Bhatt from the IMF's External Relations Department. I would like to welcome you to the press conference of the Intergovernmental Group of 24 on International Monetary Affairs and Development. Let me introduce our speakers. The Chairman of the G-24, Mr. Faud Siniora, the Minister of Finance of Lebanon. Next to him is the first vice chairman, Senator Conrad Enill, Minister of Finance from Trinidad and Tobago, and next to Mr. Siniora is Mr. Alain Bifani, Chariman of the Deputies from Lebanon, and last to the far right of me is Mr. Ariel Buira, Director of the Secretariat of the G-24.
Mr. Chairman, you have the floor for your opening remarks, then we will take questions. I just would like to ask that you identify yourself and your affiliation before asking a question. Thank you.
Mr. Siniora - Thank you very much. It really gives me great pleasure to be with you this afternoon to address you and to talk to you about the G-24 meeting.
We had this morning a meeting for the G-24, and the Ministers of the Intergovernmental Group of 24 on International Monetary Affairs and Development met today to consider the principal issues facing the international community. The conclusions of these deliberations are contained in the draft communique that is available to you. I should like to highlight to you some of the main points of the communique.
One, Ministers observed that although conditions have improved since our last meeting in April, the outlook for the world economy continues to be subject to important risks, owing to the persistent global imbalances, the slow pace of economic recovery, and the limited progress in addressing structural problems in major advanced economies. The communique includes a number of recommendations for addressing these concerns.
Two, Ministers underlined the critical need to strengthen international cooperative efforts to effectively address macroeconomic imbalances and strengthen the short- and medium-term global growth prospects.
Three, the unstable security and economic situation in Iraq was also noted, and Ministers called on the United Nations to assume its leading role in restoring peace and addressing the rebuilding needs of the country. They reiterated their deep concern about the deteriorating security situation in the Palestinian Territories, and called on donors to release urgently needed funds to ease the hardship of the Palestinian people, and they emphasized as well that the real solution to the Palestinian problem is to really work hard by all parties involved and by all the nations to really make sure that peace can be achieved, peace that is just, fair, and lasting peace in the region and particularly in Palestine.
The fourth item is a major source of concern for the Ministers was the recent failure of the WTO Cancun ministerial meeting. These critical negotiations must move forward in a multilateral fashion and be concluded within the agreed time frame, as both developed and developing countries stand to gain enormously from a successful trade round. Any drift toward bilateralism and protectionism must be resisted at all costs. Many developing countries have often taken politically difficult decisions to liberalize their trade regimes. It is time now that the advanced economies must respect their long-standing commitments to open their markets to developing countries. The Doha Round of trade negotiations must truly be a development round.
Five, on issues of crisis prevention and resolution, Ministers called on the international financial institutions to play an effective role to promote positive capital flows to developing countries. A key element is to ensure that the IMF provides sufficient and predictable financial assistance to countries in need. Ministers also reiterated their call for a general and substantial allocation of SDRs and the early ratification by all members of the proposed fourth amendment.
Sixth, one of the most important issues before us in the meetings this week is to ensure that the IMF and the World Bank have sufficient financial resources to continue their support to developing countries. In particular, the medium-term lending capacity of the IMF's Poverty Reduction and Growth Facility needs to be strengthened, and appropriate technical assistance by the Bank and the Fund is needed to help countries in the formulation of their PRSPs.
Seven, Ministers emphasized that in order to enhance the legitimacy of the IMF and the World Bank, the under-representation of developing countries in the decision making processes of these institutions should be seriously and promptly addressed as agreed in the Monterrey Consensus. In this regard, Ministers called for a concrete timetable for an early completion of the work on issues relating to the voting power, voice, and participation of developing countries in the governing structures of the World Bank and the IMF.
I would like to close by expressing on behalf of the G-24 our sincere gratitude to the United Arab Emirates authorities for the excellent arrangements and to the people of Dubai for their warm hospitality and for the real work that they are doing and really impressive work in organizing such a conference.
I would like to conclude as well that by coming to the close of this conference the time for my chairmanship expires and the minister from Trinidad and Tobago, Mr. Enill, will start his chairmanship, so I end my presentation and I am very much willing to take any of your questions.
Question - Anthony Rowley, Emerging Markets. On this question of voting power, voice and participation of developing countries in the IMF and the World Bank, first how realistic do you think these requests are and how soon do you think some additional representation might be achieved? And would you extend this also to the G-7 group? Would you think there would be a case for expanding the membership of the G-7 in this context?
Mr. Siniora - Well, this is something that has been always requested and called for by all developing countries, that their voice has to be really heard in all these international organizations.
Probably this may not be achieved in the short term, but one has to really put a time frame for such a thing - for a large number of developing countries who represent a large number of population of the world, their voice is not being properly listened to. So the whole idea is that if this cannot be achieved in the short term or in the medium term, at least this is always to remind the world that there is something that is causing imbalances and lack of representation, and the request has to be listened to. I think it is in the interest of the whole world that such a thing should happen. So, what we are asking now for is some sort of a time frame so that we can really work towards it and achieve it.
Question - Thank you. I would like to ask my question in Spanish, please. [Through translator] I would like you to help me understand the subject of the desire to renew trade negotiations in the WTO. I will repeat my question. I would like you to help me understand the request you are making to renew trade negotiations in WTO since the initial time has expired because most countries in the G-24 were the same countries which in Cancun withdrew from the negotiating table because they did not wish to continue negotiations on those terms.
Mr. Siniora - I believe that what happened in Cancun is something very sad, but I believe strongly as well that we should not conclude that it is a failure, and we should not really make it appear as a failure. It should really give us the incentive, the energy to really work hard now at straightening things so that we can achieve what the whole world has been working on and particularly the industrialized countries, they have been working on in order to liberalize and remove barriers and create real and proper competition.
During the past few years there has been a great deal of effort that has been exerted by developing countries in order to liberalize their economies and carry on the structural reform in these economies, but they have been suffering from the fact that on the one hand they have been releasing and removing the barriers from trade of products of industrialized countries coming into their markets while the types of products that they produce is being in one way or another discriminated against by developed countries. We started to realize what is happening. In fact the industrialized countries are giving subsidies to certain products that is being produced by industrialized countries to the level of about $300 billion every year. That is rendering the production of many of developing countries unable to get into these markets, and definitely cannot compete. So the trade relations between developing and developed countries is not really working properly.
There has been a lot of talk about giving more assistance and aid to developing countries to help them to improve their capacity, to improve their domestic markets and domestic financial markets, but all the developing countries they have been asking for trade and not to settle only for aid. They are wanting trade that is in the benefit and the interest of all countries involved, including the developed countries.
So I would say that the problem that is being put in front of us about the inability or the lack of political will in the industrialized countries to really remove these barriers, that is really creating the situation. I believe that what has happened in Cancun should really be a big lesson for all concerned that we should really work hard so that we can overcome these difficulties, and we should not really accept because this would mean that each country on its own will start to build further walls of protection and this will create more bilateral agreements among the various countries and will end up in a situation where everybody is going to suffer, every country is going to suffer from that. It is not in the interest of anyone. So let's try to look at it as a setback rather than a failure and try to really see what can be done in order to change the situation.
Question - Excellencies, Ministers, my name is Irene, I am from Amsterdam. I am very pleased, Mr. Chairman, that you are debating the situation of the Palestine people. This leads to my question. It is an old German rule saying follow the money, and we are in a time of terrorism, so it is also the rule of follow the money. What can be done from the IMF side or from you Ministers individually to beat terrorism? It is also a big business, terrorism.
Mr. Siniora: Outgoing Chairman of Ministers - Well, thank you for this question. I think that this conference in being held in this part of the world would give all participants the ability to really look at things in a manner that is close to the situation and trying to really understand what is happening. One has to understand that terrorism is something that is denounced and it is unacceptable, because one cannot accept that innocent people are killed for no reason whatsoever. So one has to really, on the one hand, denounce terrorism and would not really accept it by any means and particularly in this part of the world when you talk about Christianity and Islam in this part of the world, both clearly in their teachings and in the verses of Koran and in the verses of the Bible they denounce completely any act of terrorism.
On the other hand, one has to really understand that fighting these activities, one has to be on the one hand very firm with these people but on the other hand try to understand the root of the problem that is causing many people to feel that they are really hopeless, helpless, with no vision, with no future, so one has to really at the same time try to address the problems that is causing some people to behave in such a manner.
So if we look at the Palestinian problem we find out that Palestine, the Palestinian problem is the mother of many problems in the region or the mother of all problems, and probably the mother of all solutions in the region. One has to really address the problems of the Palestinian people, see what they are being subjected to in terms of oppression by the Israelis who are occupying the Palestinian Territories, and they are still occupying parts of Syria and parts of Lebanon. So this is something that has to be addressed, we have to really solve the problems. There has been an agreement made during the Madrid Conference Land For Peace and the Arabs have been asking for Israel to comply with the resolutions of the United Nations and the Security Council, and there has been continuous intransigence by the Israelis not to implement the decisions of the international community, which is represented by the Security Council and the United Nations. So one has to really look at the roots of these problems and try to address them, and I hope that by being in this part of the world it gets these leaders in the economic and political scene of so many countries to be able to focus on and know the problems in the region and particularly the Palestinian problem. Thus one of the issues that was handled in the communique this morning is that one has to really address the problem of the Palestinians and really work towards peace, and by doing so this would bring back the region into the world in terms of channeling all these resources that are being wasted and channel it towards development that will be in the interest of all the Arab world. So I hope that this will answer your question in terms of what you have mentioned regarding this.
Question - Hi, my name is Andrew Bardon, I am with Bloomberg News. I am wondering if you could expand for me on point number nine where you talk about collective action clauses, why you felt the need to expand on this separately, why is there increasing use of it? At the end you do caution against the so-called mechanical reliance on a benchmark. What are your concerns with those instruments if you can just give me a few more details about the use of collective action clauses.
Mr. Siniora - Well, let me touch on one aspect which we have mentioned here, and I will ask Mr. Buira to touch on the other aspect. Let me say some things. There has been, let's say, strong reference that we should really encourage collective action in terms of addressing political problems in the region, and this particularly when we talk about Iraq is that instead of unilateral approaches to problems, let's try to really encourage the role of the United Nations in this regard. This is on the political scene. I would ask Mr. Buira to touch on the other matters that has to do with these let's say tools that we are talking about.
Mr. Buira- Thank you, Mr. Chairman. I think we are all aware that there is no mechanism at present for dealing with the debt problems of emerging markets. There was an attempt to create an SDRM, but it was not very successful, and the path that has been taken by a number of countries is to include in their bond issues collective action clauses that would permit, that would allow debtors and creditors if ever there were a need for it to meet and discuss orderly restructuring. It is obviously in the interests of both debtors and creditors that if the debt problem arises, a restructuring be carried out in an orderly manner. It protects the economy of the debtor, it helps maintain the value of the assets of the creditor to do so.
Now, on the mechanical reliance on benchmarks, you see sometimes there is a tendency to say debt service should not be more than 10 percent of exports or 20 percent of GDP or whatever. And this is only a very rough first approximation. But when you look at the debt problem, you should look at all the aspects of a country and see if there are other influences, other factors that will come into play. Would this country have access to lines of credit, would this country have reserves, does this country have a high debt ratio or a low one? Does it have a large export sector or a small one? Does it have a strong financial position or a weak one? And so on. Because all these elements must be taken into account if you want to make a good appraisal of a debt sustainability of a country. So these are the sort of things. It really is a plea for a more comprehensive and detailed analysis rather than a simpleminded approach.
Question - Excuse me, Your Excellency, I will get you back to Cancun. You mentioned something about the political will, and it was obvious that the EU and United States went to Cancun with no political will to solve these problems, and what certain practices and actions did you discuss today to change this attitude? This is number one.
Secondly, there was some reports about Egyptian ideas or mediation to get into a compromise. Is it true and how can you elaborate about this? Thank you.
Mr. Siniora - I am not personally aware of any specific Egyptian proposals. I am not really aware of that. I am willing to look into it very closely, and I hope that there is something that can really help in bridging differences. I think the matter is not and should not really be looked at as, what is their action, what is our action, and then we will have a series of actions and reactions. This thing is a very dangerous process that is dangerous to all concerned. I think the matter has to be thought through closely, prudently, and with great concern to really arrive at something that can really be worked out in solving this problem. The developing countries are feeling that they are being discriminated against, that they are not being given a chance to develop their countries, and the terms of trade are not in their favor. So if this isssue is not really addressed, the problem is going to end up in a policy of begging thy neighbor that will end up in each creating more walls against trade that will not be in the interest of all concerned. So any initiative that can be made in order to bridge these gaps is highly appreciated. I think those who are in a position to make certain initiatives are highly invited to participate in this matter, and what is going to come out of this meeting, the G-24 meeting today with other members and other committees is going to send again strong messages that something has to be done in order to address the situation that really ended up in the Cancun meeting. Probably there was lots of expectations, more than what is really required, but that is the situation. The situation required solutions, and the Cancun meeting did not come up with a solution that was expected by the parties on board. So this is what I think has to be looked at.
Question - I am from India. You made some comments on terrorism and the problem of Palestine. India for long has been facing a problem of cross-border terrorism. Did this issue come up in the morning and what do you have to say about that, Mr. Chairman?
Mr. Siniora- I think what I mentioned regarding terrorism has been very clear in terms of the position of leaders in the Arab world and what are the teachings of Christianity and Islam. The people in this part of the world and the whole world denounces terrorism, and that is something that we should all be together in this situation and in this fight against terrorism. But at the same time one has to really look at the root of problems, try to solve them because with such a situation we should not really do something that will end up in creating a better and more conducive environment for these extremist people. So one has to understand this situation and try to go directly to the roots of the problem and solve these problems, and you will find out that being firm on the one hand and addressing the real problems on the other, it can really solve the situation. But only looking at it with one eye I think it does not really serve the purpose and does not relieve the people from the problems that are created by these type of actions.
I have been very clear, for India, for everywhere in the world, you see, any action that comes out of it, the killing of innocent people is something to be denounced.
IMF Staff - Thank you. I would like to invite Mr. Enill, the incoming Chairman of Ministers, to close the session with a few words.
Mr. Enill - At the G-24 today, one of the things that we discussed is the whole question of Cancun and the experiences coming from there, and I think there was a view expressed that Cancun should really be a wake-up call instead of a failure. It is a time in which the world needs to reflect on the process, to reflect on the manner in which the business has been conducted, to learn lessons from that and certainly to chart the way forward. G-24 this morning made some, in my opinion, significant progress in a better understanding of the challenges that lie before us. I would like to take this particular opportunity to congratulate the outgoing Chairman, the Chairman of the Deputies, and Mr. Buira because what they did during the course of last year as well was to produce for us evidence of research that will assist us as we move forward. Ladies and gentlemen, the next year is going to be challenging, and I expect to see you in April where we will update you further on the work that we have done during the next six months. Thank you.
Mr. Siniora - Thank you very much, thank you to all of you. Hope to see you around next April under his Chairmanship.