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Statement By the President of the Central Bank of Peru
Mr. German Suarez
Chairman of the Intergovernmental Group of Twenty-Four
G-24 Chairman's Address to the Development Committee
Washington, D.C.
April 17, 2000

List of Development Committee Statements

1.  It is indeed an honor to address you as Chairman of the Group of Twenty- Four.

2.  Global economic prospects look better than in September last year, but significant risks persist. Unstable oil prices, uncertain response of the Japanese economy to fiscal stimulus and the risk of a "hard" landing of the American economy are still present. Moreover, even though growth performance in developing countries is somewhat better than expected last September, recovery has been uneven and growth prospects are below pre-crisis levels. Mr. Chairman, there is still a long way to go to place developing countries in the path to sustained growth and poverty reduction.

3.  G-24 Ministers noted that the policies of industrial countries can contribute significantly to poverty reduction and growth in developing countries. In the present juncture, macroeconomic policies of industrial countries should not only consider their internal stabilization needs, but also their impact on developing countries. In particular, financial policies of industrial countries should avoid excessive reliance on interest rates to control inflationary pressures and should aim at more stable exchange rates.

4.  We welcome the inclusion of the discussion on trade, development and poverty reduction in the Development Committee agenda. We are convinced that a significant reduction of trade restrictions on exports of developing countries—in particular in the agricultural sector—is a very important complement of their domestic reform efforts to combat poverty and attain sustained growth. We favor the World Bank analytical and capacity-building support in this area.

5.  Ministers are encouraged by the progress in the World Bank/IMF work on the international financial architecture. In particular, we commend progress in the elaboration of financial assessments, corporate governance and the reports on the observance of standards and codes. However, Ministers look forward to the implementation of these standards for global financial and business practices to be made in a voluntary and participatory way, assuring their ownership by national governments.

6.  G-24 Ministers welcome the involvement of the World Bank and IMF in the implementation of the enhanced HIPC initiative. In particular, we commend Bank/Fund collaboration in supporting least developed countries to link poverty reduction to debt relief through the elaboration of poverty strategies. However, Ministers are worried that the elaboration of poverty strategies may slow down the process of debt relief. Moreover, Ministers are deeply concerned that the HIPC trust fund remains significantly under-financed and urge bilateral donors to step up their contributions. G-24 Ministers also expect that the World Bank contribution to the enhanced HIPC initiative will not compromise financing made available through other concessional windows, such as IDA.

Even though last year official aid flows experienced a small upturn, marking a temporary end to a five-year fall in official assistance, Ministers are concerned that the level of official assistance is still well below the UN-agreed target, and urge the OECD countries to increase their contributions.

7.  We support the effort of the World Bank and UN agencies to combat HIV/AIDS infection. This disease is reaching epidemic proportions in some of the poorest developing countries, with severe social, moral and economic consequences.

8.  Last but not least, let me congratulate Mr. Wolfensohn for the results the implementation of the strategic compact has brought about to the World Bank and the development community at large. In the past three years the Bank has increased the quality and quantity of its operations and non-lending services. It has also sharpened its poverty focus. In this regard, I consider appropriate to continue exploring the diverse forms of expanding the Bank's capital so as not to compromise its capital adequacy in periods of crisis and in the long run.