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Statement by the President of the Central Bank of Peru
Mr. German Suarez
Chairman of the G-24
April 16, 2000
1. It is an honor to address you as Chairman of the Group of 24. Let me stress very briefly some points of our Communiqué. The G-24 ministers note that the World economic and financial conditions improved last year, providing a favorable prospect for the continuation of the global recovery. However, excessive increases in short-term interest rates in the major industrialized countries may produce negative effects in the international financial system, and particularly have serious consequences in terms of the cost of credit for the developing economies.
2. The Group considers that progress in lowering trade barriers to developing country exports is crucial for the continuation of growth in the global economy and for a significant reduction in poverty in the developing countries.
3. Regarding the progress made on the HIPC Initiative, the G-24 Ministers call for the quick completion of the required financing. Additionally, Ministers express deep concern regarding first, the insufficiency of bilateral contributions from donor countries for the HIPC Trust Fund; second, the future availability of resources for IDA, and third about the burden of the cost of the Initiative that falls on other developing countries that have lent to HIPC countries.
4. Concerning the Review of Fund Facilities, Ministers agree on the elimination or streamlining of some facilities that are no longer needed. However, we think that there is an important role for the Extended Fund Facility and the Contingent Credit Line. The EFF is very important for members which need to address structural reform programs or balance of payments disequilibria of a structural caracter, for which a Stand-By arrangement is not sufficient. The CCL may be a useful instrument for crisis prevention. Therefore, we recommend further review to make it more attractive and operational for potential candidates.
5. On the issue of Safeguarding Fund resources, G-24 Ministers consider that misreporting of information to the Fund is a serious matter, especially if it has been deliberate, and they consider the recent Fund decision on that matter to be acceptable. However, they propose that the Fund proceed with due caution. Parallel efforts should be made to provide technical assistance to improve data collection and reporting capabilities of member countries.
6. G-24 Ministers regard that the IMF surveillance must be applied to all members, with special attention to the international implications of the domestic policies of the largest economies. However, our Group is not prepared to support extending the scope of surveillance to cover the observance of international codes and standards, which should remain a voluntary choice by each member.
7. Regarding private sector involvement, The G-24 underscores the importance of developing a well-defined operational framework to prevent and solve financial crisis. They expect the IMF to continue to play a facilitating role for the equitable negotiation of debt restructuring agreements when these become unavoidable.
8. Finally, Mr. Chairman on behalf of the Group of 24, I would like to express my appreciation for having the opportunity to address the members of this group, to the Acting Managing Director of the IMF and the President of the World Bank.