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G7 Finance Ministers' Meetings

Statement by U.S. Treasury Secretary John Snow following the G7 Finance Ministers' Meeting
Boca Raton, Florida
February 7, 2004

Good afternoon. I was extremely pleased to host my fellow G-7 Finance Ministers and Central Bank Governors in Florida this weekend.

The need for increased global growth was at the top of our agenda. We were all encouraged to see that the global economic recovery has accelerated since we met in Dubai in September. Economic stability is also improving, and risks have diminished. We welcomed these developments. We all depend on each other. Stronger global growth is in the U.S. interest, and of the G-7, and the world. We also recognize that more work is needed to ensure growth that is broad-based and sustainable, and is less reliant on a single engine.

We reaffirmed our commitment to the Agenda for Growth initiative launched last September. This initiative focuses on supply-side reforms to boost productivity, raise growth and employment, and thereby increase living standards. I refer you to the progress report that we released summarizing actions taken in each country and outlining next steps.

For our part, I was proud to report on what we have achieved in the United States since the Dubai meeting. Due to the President's economic leadership, the U.S. economy is in a strengthening recovery. The President's tax cuts have worked. They provided the stimulus that was necessary to turn the economic ship around and they are now encouraging and allowing for the economic growth that is continuing into the future.

I also discussed initiatives we will be pursuing in coming months. I detailed for my colleagues the commitments that President Bush has made to maximize growth and job creation, including spurring saving through changes to the tax system; making health care more affordable; working to prevent frivolous lawsuits from diverting money from job creation; streamlining regulations; preparing American workers for the demands of the 21st century job market; and working to make tax relief permanent, so that families and businesses alike can plan for the future.

I was also pleased to hear the details of others' efforts and their dedication to going further to increase labor and product market flexibility, boost productivity and raise employment. But words are not enough. Our actions will be the measure of success.

During our discussion, I reaffirmed our policy in support of a strong dollar. A strong dollar is in the national interest. The relative values of currencies are best set in open, competitive markets.

Sound fiscal policies are also a key ingredient for sustained growth, and it will be important that we all reduce our budget deficits as our economies recover. I underscored to my colleagues that President Bush is serious about deficit reduction. If we stick to his strong, pro-growth economic policies and proposed measures for spending restraint, we expect to cut the deficit in half, to about 2 percent of GDP, over the next five years.

I want to turn now to Afghanistan and Iraq, another key item on our agenda here today. It was my pleasure to include representatives from these two countries in our deliberations. The economic revival of these nations is vital to their citizens and important to the war on terror. These impressive leaders are playing an extraordinarily important role, and we all commend their efforts. We took particular note of the completion of the currency exchange in Iraq - a vital step forward - as well as the deregulation of interest rates and the increasing openness of the banking sector to foreign investment.

On Afghanistan, the G-7 took an important step in laying out an action plan aimed at helping to accelerate the creation of a functioning and sustainable market economy in a post-conflict country. Key steps are education, healthcare, infrastructure repair and construction, private sector development, improved revenue collection, and security sector reform. We each committed our support for the Afghan government with the goal of producing visible and measurable on-the-ground results before midyear. And, more broadly, we all agreed that we share an interest in strengthening economic growth and raising living standards in the greater Middle East.

Our commitment to combating terrorist financing continues. We agreed to a timetable of specific actions with measurable deadlines for this year to strengthen asset freezing regimes and combat abuse of the informal financial sector and non-profit organizations. We also called on the IMF and World Bank to assess compliance with the entire set of FATF recommendations on a permanent basis. We are extremely pleased with the extensive collaboration on this issue, which goes well beyond the G-7. We look forward to continuing this cooperative work to make it much harder for terrorist financiers to do business.

Turning to the poorest countries, I emphasized today that creating an environment that allows private businesses to flourish should be a higher priority on the development agenda. We all agreed that the World Bank and regional banks should work to improve investment climates and direct more resources to the private sector.

We focused on the flow of remittances, which are a tremendous source of capital flowing directly into the hands of consumers and households in the developing world. We agreed to work on reducing the roadblocks for people sending money back to their families. This means identifying and removing the barriers that slow the flow of remittances, make transactions expensive or encourage money to flow through informal channels. Improving access to financial services and infrastructure is particularly important. We in the United States have already been working closely with our key remittance partners, such as Mexico and the Philippines, to tackle these issues. I urged my counterparts to do what they can in this regard.

Looking at the international financial system more broadly, we took note of the progress made in the past year in advancing reform. Collective action clauses are taking hold as the market standard in external sovereign bond issues under New York law in external bond issues. Widespread use of these clauses will help increase predictability. We also took note of reforms implemented to limit exceptional access in the IMF, measure and account for results in the MDBs and shift to grants in the MDBs to help avoid building heavy debt burdens.

We recognize the critical importance of Argentina to live up to its IMF commitments and urge them to move forward on their needed reforms.

Thank you.

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Source: U.S Department of Treasury

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