Group of Seven statement: Ministers call for greater exchange rate flexibility

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We thank the United States for presiding over the Group of Seven this past year, and we are gratified by the international economic cooperation that has resulted in new initiatives such as the Agenda for Growth, the Strategic Review, the Global Remittance Initiative, and new Group of Seven outreach to both the Broader Middle East and North Africa countries and to China. We welcome the United Kingdom to the Group of Seven presidency in 2005, and we will continue to work together on these and new initiatives.

Global economic growth is strong and the outlook for 2005 remains favorable. Inflation and inflation expectations remain low in our economies. However, this is not the time for complacency. Growth is higher in some regions than in others; imbalances persist. Oil prices remain high and are a risk. So first, we call on oil producers to provide adequate supplies to ensure that prices moderate. Second, it is important that consumer nations increase energy efficiency. Third, it is important for consumers and producers that oil markets function efficiently, and we encourage the International Energy Agency to enhance its work on oil data transparency. We will return to the issue of medium-term energy demand and supply at our next meeting.

We reaffirmed our commitment to sound public finances and to strategies for sustained medium-term fiscal consolidation. Today we released a new report on our Agenda for Growth in which we agreed to make pro- growth structural reforms a regular part of our work to create more jobs and increase productivity. We welcome recent progress on the Doha Development Round.

We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. In this context, we emphasize that more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility to promote smooth and widespread adjustments in the international financial system, based on market mechanisms.

We remain firmly committed to continue to cooperate in combating terrorist financing, which is essential for reducing the risks of terrorist attacks.

Emerging market economies generally face favorable financial conditions; interest rate spreads are low and volatility is down in many markets. We urge emerging market countries to take advantage...