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G7 Finance Ministers' Meetings

Statement of G7 Finance Ministers,
Halifax, Nova Scotia
June 15, 2002

Since we last met, growth in our economies has strengthened and should continue to consolidate throughout the year. We are thus confident about our future prospects.

Looking forward, this foundation for stronger and sustainable productivity growth can be enhanced globally by policies and institutions that support people, markets, and ideas. These include sound macroeconomic policies, measures that support well-functioning labour, capital and product markets, a policy environment that fosters innovation and entrepreneurship, and a commitment to trade liberalization through a strong and effective multilateral trade system. Continued attention must be paid to strengthening the financial sector to ensure the most productive use of resources as well as to strengthen the resilience of the domestic economy to external shocks. We emphasize the importance of transparency, including in the private sector, to well functioning markets everywhere. We welcome the work of the Financial Stability Forum and International Accounting Standards Board responding to financial and related vulnerabilities.

We recognize the difficult circumstances facing the people of Argentina, and that the way forward is for Argentina itself to develop a plan to build a credible and sustainable economic recovery. We are encouraged by the significant progress made by Argentina in reforming the fiscal framework encompassing the provinces, and addressing their bankruptcy and economic subversion laws. However, much more needs to be done, especially regarding the monetary framework and bank restructuring. We welcome the decision to invite an IMF mission to Argentina this week. We call on the Argentine Government to work with the IMF on a new program to implement such a plan; we will continue to support Argentina and the IMF in this effort.

We are actively pursuing the Action Plan we adopted in April to improve predictability in emerging markets by strengthening crisis prevention and resolution. We are working with the Fund and others to advance all of its elements, including the active pursuit of contractual clauses. We welcome the interest many in the private sector have shown in this approach. At the IMF, we are pursuing more objective and transparent surveillance, including the assessment of debt sustainability, and consideration of greater independence between the IMF’s surveillance and lending roles. We will continue to work to enhance discipline on the size of IMF assistance packages, and define more precisely the circumstances where exceptions might be justified. We strongly support the Fund’s continuing work on a sovereign debt restructuring mechanism.

We reiterate the call made at Monterrey for a Global Development Compact between developed and developing countries based on mutual accountability for results. We emphasize that development assistance is most effective when recipient countries have sound economic policies, strong institutions and good governance, and agree that priority in development assistance should be given to poor countries that meet these criteria. We agree that developed countries have a responsibility to improve development cooperation in support of country-owned poverty reduction and growth strategies, increase technical assistance, provide appropriate aid and debt relief, and expanding market access.

We welcome the progress achieved by the Multilateral Development Banks in implementing the proposals for reform discussed last year, but more needs to be done. We urge the MDBs to continue to increase their collaboration and the effectiveness of their assistance, including through increased priority on improving governance in recipient countries, an enhanced focus on measurable results, and greater transparency in program decisions.

We also examined several key development issues in more detail, including the Highly Indebted Poor Countries (HIPC) initiative, education, and the International Development Association (IDA). With regard to the HIPC initiative, we will work with the IFIs and other donors to promote the participation of all creditors that have not yet done so, in particular some multilateral institutions, to fully participate in the initiative; to complete the financing of the HIPC Trust Fund; and thus to deliver on our commitment to help achieve debt sustainability for the world’s poorest countries.

We also endorse full replenishment of IDA, the cornerstone of multilateral support for low-income countries. We welcome the increased use of results measurement to track development outcomes. We support an increase in the use of grants, in the range of 18 per cent to 21 per cent of the IDA13 program, to enhance the effectiveness of IDA in helping the poorest and debt vulnerable countries combat HIV/AIDS, support the social sectors, including education, and overcome the effects of devastating conflict. We will work with our fellow IDA donor governments to finalize the negotiation as soon as possible along these lines.

We also note the World Bank’s Education Action Plan and strongly endorse the expeditious implementation of a plan focused on program quality and measurable results. Each of us in turn will work to support the Education for All goals with countries that have credible education plans and strong policy commitments in place. We urge other donor governments and the multilateral development banks to join us.

Following the tragic events of September 11, 2001, we issued an Action Plan to Combat the Financing of Terrorism and committed to work with the broader international community to achieve results. Our Action Plan has fostered international cooperation to stop the flow of funds to terrorists, protect the international financial system from abuse, and enhance transparency. In this regard, we welcome the work underway to combat the abuse of charities and Hawalas. Over 160 countries and jurisdictions have taken action to freeze terrorist assets. The implementation of UN instruments has intensified and countries are working diligently to comply with the FATF’s Special Recommendations. We call on the FATF-member countries to comply quickly with these recommendations. To encourage the broadest possible participation in this fight, we call on the FATF to identify countries for follow-up assessment and technical assistance, by the IMF, the World Bank, and the United Nations. We urge the IMF and World Bank to begin conducting integrated and comprehensive assessments of standards to combat money laundering and financing of terrorism.

We agree that the administration and enforcement of tax laws depend increasingly on transparency and effective international exchange of information. We call on all countries to permit access to, and exchange, bank and other information for all tax purposes; OECD countries should lead by example. Progress in this area is urgently needed and we intend to review developments at our next meeting.

A stable and more prosperous Afghanistan is important to the Afghan people and to the world. We are determined to ensure that the international community supports Afghanistan, and delivers on the commitments pledged at the Tokyo Conference in January 21-22, 2002.

We discussed with the Finance Minister of Russia the progress made by this country toward structural reforms. We encourage further efforts to strengthen the financial sector, improve corporate governance and the investment climate, and combat money laundering and terrorist financing. We agree on the importance of Russia's early accession to the World Trade Organization (WTO).

We will be reporting on a number of subjects discussed at this meeting to our Leaders in connection with the June 26-27 Kananaskis Summit. We welcomed the participation in, and contributions to, our discussions preparatory to the Summit, the Finance Minister of Spain representing the Presidency of the European Union and the European Commissioner for Economic and Monetary Affairs.

Source: Department of Finance Canada

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