International Monetary and Financial Committee Press Conference by UK Chancellor of the Exchequer Gordon Brown and International Monetary Fund Managing Director Horst Köhler
November 17, 2001
Documents Related to the November 17, 2001 IMFC Meeting
IMFC Ottawa Meeting
Islamic Republic of Afghanistan and the IMF
United States and the IMF
Free Email Notification
International Monetary and Financial Committee Press Conference by UK Chancellor of the Exchequer Gordon Brown and International Monetary Fund Managing Director Horst Köhler|
Government Conference Centre
Saturday, November 17, 2001
Gordon BROWN, Chancellor of the Exchequer (United Kingdom) and Chairman, International Monetary and Financial Committee
Horst KÖHLER, Managing Director of the International Monetary Fund
Thomas DAWSON, Director IMF External Relations Department
Mr. Dawson: Welcome to the Chairman's press conference. To my immediate right is Chancellor Gordon Brown, Chairman of the IMFC, and on his right is Horst Köhler, the Managing Director of the IMF.
Mr. Brown: Ladies and gentlemen, our meeting today has taken place at a testing and challenging time for the global economy. It would have been understandable at a time like this for each country to have turned inwards and focused on their domestic concerns. But I believe today's meeting has been a reaffirmation of the importance of global cooperation. Indeed, it has reflected the fact that the global slowdown requires and demands global cooperation. The alliance that we have formed against terrorism has been boosted today by the decisions of the International Monetary and Financial Committee to declare its support-all 183 members of the IMF-for the special recommendations on combating the financing of terrorism. We are calling on all countries to take action to ensure that financial institutions are able to report suspicious transactions, and we are calling on all countries to ratify and implement the United Nations instruments to counter financial terrorism.
For the first time ever, the IMF has committed itself to extending its bilateral surveillance to include members' efforts to counter the financing of terrorism. We have agreed that all 183 countries should consider establishing financial intelligence units to analyze potentially suspicious transactions. We have agreed on the need to share information and ensure cooperation between national financial intelligence units, and we have agreed that the IMF should provide targeted assistance, expert assistance-in some cases financial assistance-to ensure that every country can play its part and has the resources to do so in the fight against terrorist financing. We have called on the United Nations to create a technical register of countries and their needs in relation to tackling terrorist financing. We have set a time limit; we said all these things should be moved forward within three months, by the first of February, and we would want to report at the April meetings of the International Monetary Fund.
I believe all our members are resolute in wanting to take the action that is necessary to stop the supply of funds to terrorist organizations around the world. But our global cooperation has extended also to the decisions we have reached on the global economy and the need to strengthen international cooperation and our international financial institutions. I want to draw your attention to the communiqué itself, to the statement that we have made about the world economy. We say that the outlook remains uncertain, and we say that continuing vigilance is needed. We say that bold policy action has already been taken to support a robust recovery during 2002, and we say that it is essential that the international community stands ready to take timely action to maintain stability and to reinvigorate growth. We say that the authorities, the monetary authorities, stand ready to take further action, if appropriate. We say also that, while the scope for discretionary fiscal policy action varies across countries, the advanced economies should allow automatic stabilizers to operate. We emphasize the importance of the agreements on trade at Doha being pushed forward to reinvigorate world economic growth.
We also are agreed on the need in the different continents for structural reforms to continue and, indeed, in some cases, to be stepped up so that we can have the increased productivity that is important for growth in the longer-term. We turned our attention also to the needs of the poorest countries and the problems that many will face as a result of the slowdown in the world economy. We agreed on the recommendation of Horst Köhler, the Managing Director, who has done so much in this area, that we must take into account worsening global growth prospects and declines in the terms of trade when updating the HIPC Initiative and debt sustainability analysis at completion point. We say that advanced economies must also be prepared to meet the responsibility in providing increased development assistance and debt relief to tackle the increased challenges of poverty reduction and to achieve the millennium development goals. These are the goals for 2015 that every child be in primary education, that we halve poverty, and we cut infant mortality by two thirds. We say that Ministers reiterate the importance of fully financing the enhanced HIPC Initiative, and we urge bilateral donors to fulfill this commitment. We also discussed at our meeting, improving the IMF's facility to engage in crisis prevention and crisis resolution.
You can see that this has been an important meeting for the international financial system, that global financial cooperation is being strengthened in all these areas, that we accept and act upon the increasing interdependence of the world economy, and we recognize the responsibilities of the richest countries to the poorest countries around the world. We affirmed that it is not only right to focus on globalization, but that it has never been more important to get globalization right.
For Mr. Brown, can you say how much money it may cost to rebuild Afghanistan that is coming up in a couple of days and how much that money should come from G-7 countries?
Mr. Brown: I agree with what Horst is saying. All the monetary authorities represented around the table have said that they stood ready to take further action, if appropriate, and it was also agreed from the Finance Ministers that, of course, the scope for discretionary fiscal policy does vary, but what we agreed was that the advanced economies should allow automatic stabilizers to operate. On the question of Afghanistan, as many of you know, $700 million was already pledged for humanitarian assistance, and that is in relationship to the refugee problem and, of course, food for people in Afghanistan itself. As far as the reconstruction of Afghanistan, the conference that will take place will have to look at a number of estimates and assessments of what needs to be done, that the international community does stand ready to do what is necessary to help in the reconstruction of Afghanistan, but it is not possible to give figures as you suggest at the moment.
QUESTION: (inaudible) ... to cut rates now or not, is it the right time now.
Mr. Brown: What I said in my speech on Friday was that there had to be a new deal between developed and developing countries, that it was as an increased recognition of our interdependence that I believe that in return for actions in developing countries to pursue pro-poor growth policies and to pursue the regime that has been suggested on trade at Doha, and equally, of course, to attract investment for the future, that we should as an international community be prepared to do far more. I mentioned the Zedillo report and he estimates that it would cost $10 billion for primary education to be available for all, $12 billion for the global health initiative to work in cutting infant mortality by two thirds, and $20 billion to halve the amount of poverty, as we promised to do by 2015. I said we must as an international community look at this $50 billion figure suggested by Zedillo, and my view was that we had to do more and look at how, through an international development trust fund, we could find the means by which countries could make their contribution in the future.
Now, today was not the time obviously for discussing sums of money. There is a Financing for Development conference coming up next year. This will be a matter that will be discussed at the April meetings of the IMF and the Development Committee. But what you have from today's meeting is an agreement that advanced countries must be prepared to meet their special responsibility in providing increased development assistance and debt relief to tackle the increased challenges of poverty reduction and to achieve the millennium development goals, and I think this is the first time we have seen a statement as bold as this from the International Monetary Fund's Committee, and I believe it represents a shared desire that we move forward to meet these development goals and that the responsibilities that you talked about from the rich to the poor countries are fully accepted by the international community.
Mr. Köhler: I heard that the Deputies of the G-20 have got the instruction to work on that. So, I am interested, of course, to get their product. The IMF has a work program on private sector involvement, and I think we got some further input at this meeting. We will go through this work program very systemically because in the end it should work. I am quite confident that we will come up with a reasonable concept for private sector involvement.
QUESTION: To pursue that point a little bit further, Chancellor, I noticed that in your speech yesterday you mentioned that an international bankruptcy procedure is something that you support. Secretary O'Neill has mentioned sort of casually that he likes the idea. This idea keeps coming up in peoples' statements and I wonder if we could get the two of you to formally state whether there is a consensus among, whatever you want to call it, the powers that be that this finally ought to happen. Since everyone agrees that it will take a long time to work it all out, I know you have a lot on your minds these days, but is some effort going to be made to get this rolling?
Now, of course, we have do more. We are doing more for post-conflict countries. We will have to be more flexible because of what has been happening as a result of the slowdown in the world economy. We will be reconsidering, if necessary, the position of the debt countries at completion points so that there is a sustainable exit from debt. I believe that the same coalition of forces must be brought together now for that new deal between the developed and developing countries. I believe there is now also the political will to do that, that people understand that the real issue is not whether you are for or against globalization, because globalization is moving forward. The real issue is whether you are for or against social justice on a global scale, and I believe there is an increasing recognition that we have to work together to make the world and the global economy a better place for the world's poor.
But I am eager to add to this that having said that debt relief is an important part of a comprehensive strategy to fight poverty, we should not forget about the other two pillars of this concept, and this is market access and this is more official development aid. I gave some very concrete numbers here at the Committee about cotton subsidies, about sugar subsidies, and about subsidizing rice, directed to the United States, directed to the European Union and to Japan in order to make clear that whenever, however, and how much we will give on debt relief, if the poor countries do not themselves have a better chance to get sustainable business activity in their country and in their economy, we will not be successful in fighting poverty. Therefore, this market access, opening of markets in the advanced countries and phasing out the subsidies in advanced countries, is the number one issue.
The number two issue is this 0.7 (percent of GNP) objective of official development aid. This is direct, this is grant money, this is money in my view which goes via the budget where the parliaments can really measure their magnitude of solidarity or lack of solidarity. So, we should not distract ourselves from these major points. I have a bit of a concern that this concentration of the debate on debt relief or the Tobin tax is distracting us a bit from the awareness or recognition that there is a major problem in the fight against poverty, and this is the selfishness in the advanced economies and societies and their difficulty in speeding up their pace of structural reform. Because to fight poverty successfully means we need to be serious that growth is based on structural reform in two ways: the poor countries have to adapt to a modern economy, but also the advanced countries have to adapt and have to restructure their economies. Labor markets and subsidies which are based on the 20th century economy, in principle, are outdated and have to be outdated.
Mr. Dawson: Thank you very much.