Interim Committee press conference: Ciampi, Camdessus discuss progress on reform issues and HIPC Initiative

• Pages: 134-137

Page 134

As for the world economic outlook, the evaluation was that since our October meeting in 1998, the risks of a global recession have declined. Policy actions undertaken by both emerging and industrial countries helped to improve market confidence. The outlook for world output remains sluggish for 1999, in part because of the contractionary impulse from the Brazilian crisis. Page 135

The Committee noted that, first, after the deep output contraction in the Asia-crisis-afflicted economies, activity has turned around in Korea and is bottoming out in the other countries; most of the advanced economies in North America and Europe have proved resilient to the crisis; the situation has stabilized in Brazil since early March; and investor sentiment toward many emerging market economies has improved. Notwithstanding these positive developments, the Committee was unanimously of the view that there are still risks on the downside, and member countries should continue to focus on policies required to sustain growth in the short and medium term.

The second item on our agenda was the strengthening of the international financial architecture. The Committee welcomed the establishment of the Contingent Credit Lines (CCL) in the IMF. The CCL is an important defense against financial contagion. Moreover, it will provide strong incentives for the adoption of stronger policies and the constructive development of the private sector. We regard this facility as a key component of our crisis-prevention strategy. We discussed at length the importance of an early involvement of the private sector in the prevention and resolution of a crisis.

We then discussed the institutional reforms of the Interim Committee itself. We all agreed about the basic principles for further work, and we asked the Interim Committee Deputies and the Executive Board to explore further the scope for institutional changes that may improve the efficiency of the Interim Committee. They will report at the next meeting in October.

On international standards and IMF surveillance, the members welcomed the IMF's progress in developing, disseminating, and monitoring the implementation of internationally recognized standards. I am referring mainly to the code of monetary and financial policies and of progress made on transparency issues.

Turning to the Heavily Indebted Poor Countries (HIPC) Initiative, the Committee agreed to renew efforts to further reduce the debt of low-income countries undertaking strong adjustment programs. We have asked the Executive Board of the IMF, together with the Board of the World Bank, to develop specific proposals to enhance the current framework, which the Committee will examine at the October meeting.

On postconflict assistance, we welcome the Board's decision to identify additional ways to address the exceptional needs of the poor postconflict countries.

The last, but important, item on our agenda was the impact of the Kosovo crisis. The Committee endorsed the need for a rapid, substantial, and coordinated response by the international community to the economic consequences of the Kosovo crisis in order to alleviate human suffering, limit economic disruption, and avoid slippage in the reform process under way in the neighboring countries. These are the main items we have discussed.

Camdessus: I have nothing to add at this stage, except that I am very satisfied to see the change that is going on in the Interim Committee. The Chairman...