Transcript of a Press Conference by the G-24 Ministers
IMF News, April 15, 2000
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Bibliographic details
- Published: April 15, 2000
Overview
- Event: Press conference of the Chairmen of the Ministers of the Group of Twenty-Four (G-24).
- Date: April 15, 2000.
- Occasion: World Bank/IMF Spring Meetings.
- Time convened: 4:05 p.m.
- Time concluded: 4:50 p.m.
- Principal speakers identified:
- Mr. Germain Suarez, Chairman of the Ministers of the G-24; President of the Central Bank of Reserve of Peru.
- Mr. Ernest Ebi, First Vice-Chairman; Deputy Governor of the Central Bank of Nigeria.
- Mr. Carlos Saito, Chairman of the Deputies of the G-24; Advisor to the President of the Central Bank of Reserve of Peru.
- Dr. Habib Abu Sakr, Second Vice-Chairman; Director General of the Ministry of Finance of Lebanon.
Key messages and findings
- Historical context:
- The G-24 was created in Lima, Peru in November 1971 by the Group of 77.
- At the time of the press conference the G-24 had existed for 29 years.
- Central priority:
- Much work remains to be done to reduce the gap between the richest and the poorest countries.
- The communique underscores the importance of strengthening efforts to fight poverty, including timely and adequate funding of the Enhanced HIPC Initiative and lowering barriers to developing country exports.
- Surveillance and standards:
- Importance of effective surveillance of all members, with focus on regional and international implications of domestic policies pursued by the largest economies.
- Support for voluntary observance of international codes, standards and best practices; concern that making them mandatory within Fund surveillance could lead to additional conditionality.
- Financial market volatility:
- Particular concern about the negative impact of an excessive increase in short-term interest rates in the major industrial countries on growth prospects and the cost of credit for developing countries.
- Concern about potential dangers of too much volatility among the major currencies and financial asset markets.
- Bretton Woods reform:
- The G-24 welcomes debate on reform of the Bretton Woods institutions.
- Strong reservations about proposals to reduce access, increase costs, or shorten maturities of lines of credit provided by the Bretton Woods institutions.
- Positive view on strengthening cooperation between the Bank and the Fund within their areas of expertise to foster sustainable economic growth and poverty reduction.
Specific concerns and analyses
- Enhanced HIPC Initiative:
- Deep concern about the insufficiency of bilateral contributions from donor countries to the HIPC Trust Fund.
- Concern about the future availability of IDA lending for HIPC and non-HIPC poor countries.
- Concern about the burden of the cost of the initiative falling on other developing countries that have lent to HIPC countries.
- Trade barriers:
- Industrial country barriers cited as impediments to developing country exports, with sensitive products identified as textiles, foodstuffs, and subsidized industrial products.
- Call for continuation of trade negotiations and reciprocity from industrial countries given developing countries’ liberalization of external trade.
- Representation in international fora:
- Developing countries described as inadequately represented in international financial fora, including references to the G-7 Commitment on Financial Stability and Basle committees on bank supervision.
- Call for a permanent mechanism to ensure participation of all countries in preparing banking regulation and surveillance standards.
- Exchange rate movements:
- Reference to exchange rate volatilities among the U.S., Japan and the European Union; concern about competitive devaluations and their trade effects.
- Communication and transparency:
- Technical papers produced by the G-24 technical group (on poverty, IMF and World Bank effectiveness, etc.) are disseminated but could be coordinated better for public access.
Policy positions and recommendations
- Poverty reduction financing:
- Request for timely and adequate funding of the Enhanced HIPC Initiative.
- Call for increased bilateral contributions from G-7/donor countries to avoid undue burden on other developing countries and regional banks.
- Bretton Woods policy prescriptions:
- Opposition to proposals (as attributed to the Meltzer Commission) that would cease concessional lending to the poorest members, limit World Bank resource access to specific countries, or limit Fund surveillance to only some countries or shorten IMF loan maturities.
- Advocate selection for IMF and World Bank vacancies based on transparency and picking the best candidate.
- Macro policy coordination:
- Emphasis on vigilance regarding monetary tightening in major economies and the need for coordination at the G-7 level to mitigate adverse spillovers to developing countries.
- Technical assistance:
- Recognition that some countries will need technical assistance and more time to adopt international standards and codes.
Q&A highlights and interlocutor concerns
- Market volatility and growth prospects:
- Discussion of stock market volatility (referenced event of Friday, April 14) and whether observed movements were temporary or indicative of longer trends; emphasis on analyzing volatility in the context of major policies in industrial countries.
- Trade and WTO engagement:
- When asked if the communique would be sent to the WTO Committee on Agriculture, the Chairman referred questioners to the communique and noted he would discuss with G-24 members.
- Protester criticism and public perception:
- G-24 ministers acknowledge demonstrations and public dissatisfaction; characterize protestors as expressing concern about poverty and the role of the Fund and Bank.
- Ministers emphasize the need for better communication and public education about the roles of the Fund and Bank and admit to sensitivity to criticisms.
- Nigeria-specific exchange on HIPC and debt relief:
- Nigeria had not qualified for the HIPC Initiative at the time of the press conference.
- Nigeria was working to reach an agreement with the IMF before approaching the Paris Club for debt relief; awaiting resolution of a budget issue with the National Assembly expected within a fortnight to proceed with standby arrangements.
- Post-reform actions noted in Nigeria: deregulated interest rate regime, liberalized foreign exchange market, privatization program, deregulation of some subsidies; cooperation with the Fund on performance benchmarks.
- Standards, conditionality and surveillance:
- Concern that attaching standards and codes to Fund surveillance might create additional conditionality for countries seeking financing.
Operational and procedural notes
- The press conference was conducted with some responses in Spanish and French (interpreted into English).
- The communique is repeatedly referenced as the basis for the G-24 positions stated in the press conference.
Transcript of a Press Conference by the G-24 Ministers, April 15, 2000.