Ministers stress global uncertainty, potential need for special financing

• Pages: 112-115

Page 112

Following is the text of the communiqué of the Group of 24, issued on April 11 in Washington, D.C. Ministers of the Intergovernmental Group of 24 on International Monetary Affairs and Development held their sixty-ninth meeting in Washington,D.C., on April 11. Fouad Siniora,Minister of Finance, Lebanon, was in the chair, with Senator Conrad Enill, Trinidad and Tobago's Finance Minister, as First Vice-Chair, and Damian Ondo Mañe, Executive Director, IMF, representing Gabon, as Second Vice-Chair.

The meeting of the ministers was preceded on April 10 by the eighty-first meeting of the Deputies of the Group of 24, with Alain Bifani, Director- General,Ministry of Finance, Lebanon, as Chair.

Global economic prospects

Ministers observe that, since their last meeting in September 2002, the global economic recovery has become much weaker than anticipated and the outlook remains highly uncertain. This uncertainty owes much to the widening global imbalances, the slowing growth in major advanced economies, the lack of progress in addressing structural problems in major economies, and the effects of the bursting of the asset price bubble. This situation has been exacerbated further by the war in Iraq, which will have serious implications, not only for Iraq and the neighboring countries, but is also likely to impact negatively on countries outside the region.Ministers urge the international community to be vigilant and stand ready to provide special financing to countries that may face significant burdens on their balance of payments and to mitigate risks associated with commodity shocks and the decline in tourism receipts and private transfers.

They note that small states are often severely affected by these negative developments. Ministers note that this increased uncertainty raises more fundamental concerns regarding the multilateral, cooperative, and institutional approach to international decision making, including those dealing with economic and financial governance. This approach is more critical today than ever, in light of the increased interdependence and the heightened global risks.Ministers call for a reaffirmation of this approach through a clear commitment by all countries and groups of countries, meeting in Washington,D.C., this week, to the shared economic, financial, and development goals, and to the actions necessary to achieve them.

Ministers are concerned about the continued sluggishness of domestic demand in major industrial countries, as evidenced by the stagnation of industrial production, the slowing down of world trade growth, the softening of labor market conditions, and the weak recovery of global fixed investment. They observe that the continued decline in global equity markets and fragility of investor confidence in international capital markets have turned emerging markets into net capital exporters and intensified the risks of a credit crunch.Ministers emphasize in this regard that a striking feature of the current international economic situation is that the United States has become the largest debtor and importer of capital.

Ministers share the concern of the Managing Director of the IMF that, based on current policies, the U.S. fiscal deficit will increase sharply over the coming years. The likely widening of the current account deficit could well lead to further diversion of resources from developing countries. A sharp fall in the dollar...