1. The Finance Ministers and Central Bank Governors of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States met on October 11 and 12, 1991 in Bangkok for an exchange of views on current international economic and financial issues. The Managing Director of the IMF participated in the multilateral surveillance discussions.
2. The Ministers and Governors reviewed developments and prospects in their economies. On balance, aggregate growth in G-7 countries in 1991 has been weak. Differences in cyclical positions persisted in the first half of this year. They noted that the United Kingdom is moving towards recovery while recovery is underway in the United States and Canada. They also noted that growth was projected to pick up in Italy and France. In Japan and Germany, growth has slowed from the rapid pace in 1990 to a more sustainable rate. Inflationary pressures have eased in most countries, especially those in recession, reflecting the more moderate pace of activity, lower oil prices, and other factors. These pressures are expected to ease further in most countries, while remaining strong in others. They welcomed the substantial reduction in external imbalances that has occurred in recent years, and noted the importance of avoiding the re-emergence of very large imbalances. They reaffirmed their continued support for economic policy coordination as essential for achieving their common objectives of sustained global economic growth with price stability.
3. According to the different economic conditions in each country in recent months, interest rates have declined in Japan, the United Kingdom, Canada, the United States, France and Italy, while remaining broadly unchanged in Germany. The Ministers and Governors emphasized the importance of fiscal and monetary policies which while reflecting the differing situation in each country, provide the basis for lower real interest rates and sustained growth with price stability in a medium-term perspective.
4. The Ministers and Governors noted the importance of strengthening global savings. They stressed that the full implementation of budgetary measures adopted in some countries is essential in order to have substantial reductions in high budget deficits, and they emphasized the need for all countries to curb unproductive expenditures. In addition, they reaffirmed the importance to remove obstacles to private savings.
5. The Ministers and Governors reviewed developments in international financial markets, and concluded that the recent exchange market developments were broadly in line with continued adjustment of external imbalances. They also reaffirmed their commitment to cooperate closely on exchange markets.
6. The Ministers and Governors, regarding recent irregularities that were revealed in some financial markets, affirmed the need for effective measures to avoid the recurrence, with a view to preserving the integrity of financial markets and systems.
7. The Ministers and Governors reaffirmed their support for the international debt strategy aimed at achieving and maintaining debtor countries' external viability As concerns specifically the poorest, most indebted countries, they acknowledged the need to more concessional restructuring terms in support of sound economic actions. They therefore called on the Paris Club to continue its discussions on how best to implement promptly additional debt relief measures, on a case by case basis, that go well beyond the relief already granted under the Toronto terms.
8. In view of the importance of a market-oriented approach in development strategies, the Ministers and Governors noted that it is essential for developing countries to encourage private capital flows to develop a dynamic private sector, and to improve the investment climate. They observed that emphasis placed on entrepreneurial initiatives complemented by appropriate economic policy management has been the sources of the economic success in many countries, as witnessed, for example, in the Asian region. They agreed on the importance of the Multilateral Investment Fund (MIF) in supporting Latin American and Caribbean countries in reforming their investment regimes and welcomed actions being taken to make the MIF operational.
9. The Ministers and Governors underscored that the IMF and the World Bank must have adequate resources to fulfill their systemic responsibilities in supporting comprehensive economic reforms. In this regard, they reaffirmed their commitment to complete implementation of the Ninth Quota Review, including the ratification of the Third Amendment to the IMF's Articles by the end of 1991 and they encouraged all other countries to take the necessary steps.
10. The Ministers and Governors noted that improved market access and sustained expansion in global trade would provide the basis for world economic growth, and is particularly vital for countries implementing market-oriented reforms. In this connection, they re-emphasized the importance of bringing the Uruguay Round to a rapid and successful conclusion.
11. The Ministers and Governors reviewed the current economic situation and the ongoing efforts toward economic reform in the Soviet Union. They have invited the Soviet representatives for an informal discussion this evening.
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