Civil G8 2006

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Verbatim Text Of Statement By G7 Fin Mins


We, Ministers and Governors, met today and resolutely reaffirmed that openness and globalization are beneficial in promoting economic prosperity and reducing poverty. These benefits are most effectively realized with sound economic management and supportive policies for those whose welfare is adversely affected. We committed to: strengthen economic policies in our countries; work together to remove distortions to the global adjustment process; resist protectionism and promote liberalization of trade and investment including an ambitious outcome from the Doha Development Round; and modernize the international financial institutions.
The strong global economic expansion continues into its fourth year and the outlook remains favorable, supported by improved macroeconomic policies in many countries as well as benign financial market conditions. Inflation remains contained despite high oil prices and global trade growth is buoyant. Yet risks remain from oil market developments, global imbalances, and growing protectionism. We underscored that global economic adjustment is a shared responsibility.
We are strengthening the dialogue between oil producers and consumers to further improve market transparency through the release of more complete and timely data on production, consumption and inventories, and for clear reporting of oil reserves. We urge investment in exploration, production, energy infrastructure, and refinery capacity. Investment is crucial and oil producing countries should provide open and secure investment environments to enable market participants to meet pressing needs. We remain committed to greater energy efficiency, conservation, and diversification, which will improve the balance between supply and demand.
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. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
We welcomed the IMF Managing Director's Strategic Review to equip the IMF to help countries meet the macroeconomic and financial policy challenges of globalization. We supported the strengthening of IMF surveillance, including through increased emphasis on the consistency of exchange rate policies with domestic policies and a market-based international monetary system and on the spillover effects of domestic policies on other countries. We support a new remit for bilateral and multilateral surveillance by the IMF. An ad hoc quota increase would help better to reflect members' international economic weight. We agreed on the need for comprehensive reform of the IMF, and called on the Managing Director to come forward with concrete proposals for the Annual Meetings in Singapore.
We reaffirmed the importance of implementing our commitments on development. In that context, we welcomed the decision by the IMF, World Bank, and African Development Bank to implement 100 percent debt cancellation for qualifying countries. We emphasized the importance of avoiding a fresh accumulation of unsustainable debt, of responsible lending by creditors, and of ensuring that recipient countries incur new debt in accordance with the debt sustainability framework. We stressed the need to bolster the fight against corruption so that development assistance effectively promotes growth, and call on the President of the World Bank and other MDB Heads to continue their focus on this issue, bringing forward a strategy in this critical area. Having endorsed the concept of a pilot Advance Market Commitments for vaccines, we call for the additional work necessary to make its launch possible in 2006.
We reiterated our commitments to combat money laundering and terrorist financing and call on the IMF and the World Bank to collaborate closely with the Financial Action Task Force.
Finally, we thank Roger Ferguson for his chairmanship of the Financial Stability Forum, and we have asked Mario Draghi to be his successor.
ANNEX: GLOBAL IMBALANCES

We, Ministers and Governors, reviewed a strategy for addressing global imbalances. We recognized that global imbalances are the product of a wide array of macroeconomic and microeconomic forces throughout the world economy that affect public and private sector saving and investment decisions. We reaffirmed our view that the adjustment of global imbalances:
Is shared responsibility and requires participation by all regions in this global process;
Will importantly entail the medium-term evolution of private saving and investment across countries as well as counterpart shifts in global capital flows; and
Is best accomplished in a way that maximizes sustained growth, which requires strengthening policies and removing distortions to the adjustment process.
In this light, we reaffirmed our commitment to take vigorous action to address imbalances. We agreed that progress has been, and is being, made. The policies listed below not only would be helpful in addressing imbalances, but are more generally important to foster economic growth.
In the United States, further action is needed to boost national saving by continuing fiscal consolidation, addressing entitlement spending, and raising private saving.
In Europe, further action is needed to implement structural reforms for labor market, product, and services market flexibility, and to encourage domestic demand led growth.
In Japan, further action is needed to ensure the recovery with fiscal soundness and long-term growth through structural reforms.
Others will play a critical role as part of the multilateral adjustment process.
In emerging Asia, particularly China, greater flexibility in exchange rates is critical to allow necessary appreciations, as is strengthening domestic demand, lessening reliance on export-led growth strategies, and actions to strengthen financial sectors.
In oil-producing countries, accelerated investment in capacity, increased economic diversification, enhanced exchange rate flexibility in some cases.
Other current account surplus countries should encourage domestic consumption and investment, increase micro-economic flexibility and improve investment climates.
We recognized the important contribution that the IMF can make to multilateral surveillance.
World on track to halve poverty rate by 2015 but Africa lags well behind: report
Agence France Presse, Apr 20
WASHINGTON, April 20, 2006 (AFP) -
A worldwide campaign is on track to halve the global poverty rate by 2015, but its success risks bypassing sub-Saharan Africa where child mortality is on the rise, a World Bank-IMF report warned Thursday.
"On current trends, if the developing world can sustain the growth momentum of the past 15 years it will be able to reduce the share of the population living in extreme poverty -- living on less than one dollar a day -- by half between 1990 and 2015," the report said.
The global extreme poverty rate stood at 27.9 percent in 1990 but had been brought down to 21.7 percent by 2002 and is projected to fall to 10.2 percent by 2015.
The World Bank-IMF's third annual Global Monitoring Report was prepared to assess progress toward meeting the Millennium Development Goals (MDGs), adopted by 189 world leaders in 2000. They contain the call to halve the world's poverty rate by 2015.
"While we are very far from reaching the MDG goals everywhere, there is encouraging evidence of progress, particularly in some developing countries," said World Bank President Paul Wolfowitz.
He said 50 countries had achieved universal primary school education and pointed to signs of the first decline in HIV/AIDS infection in high-risk countries.
"However, the advances are uneven," Wolfowitz acknowledged. "Many countries in Africa and Latin America are not reducing poverty, and some are slipping behind."
Much of the progress toward meeting the MDG anti-poverty target has been made in China and India, which are enjoying red-hot economic growth.
But the study also found that growth in per capita gross domestic product in low-income countries was higher in 2005 than the average for any five-year period since the late 1970s.
In sub-Saharan Africa per capita growth came to an estimated three percent for the second straight year in 2005.
But those gains have apparently had little effect so far on the region's anti-poverty drive. The sub-Saharan poverty rate is 44 percent, virtually the same as in 1990, according to the report, and is seen remaining above 38 percent in 2015 rather than the regional target of 22.3 percent.
By contrast, east and south Asia are expected to meet their MDG anti-poverty goals.
Among other goals in the global campaign is a commitment to reduce child mortality by two-thirds by 2015.
But the report concluded that most low- and middle-income countries were not making enough headway to reach the target, with the share of children dying before the age of five increasing in 15 countries, primarily those affected by conflict and the HIV virus.
It named 10 countries where child mortality is on the increase, eight of which are in sub-Saharan Africa.
By contrast, nine developing countries have reduced child deaths, according to the report.
Elsewhere it noted varying degrees of progress in education, gender equality, maternal mortality, diseases and water and sanitation.
The report also said "major progress" had been made in 2005 in debt relief for the world's poorest nations.
It cited in particular a plan adopted by the Group of Eight powers to cancel 100 percent of the debt that some of the poorest countries owe the African Development Bank, the World Bank and the International Monetary Fund.
Nineteen countries have already been relieved of repaying about 3.4 billion dollars in debt owed to the IMF.
Overseas development assistance from key industrialized countries rose to 106 billion dollars last year from 80 billion in 2004, according to the report.
Nonetheless, the World Bank and the IMF reminded rich countries to make good on commitments made in 2005 to increase aid, notably a G8 pledge to provide Africa with an additional 25 billion dollars a year by 2010.
"Aid must become more predictable, less fragmented, more closely aligned to countries' needs and targeted to where it will be productively used to advance the Millennium Development Goals," said Mark Sundberg, lead author of the report.
But Max Lawson, policy advisor at Oxfam International, charged that aid from rich countries has been squandered.
"Rich country leaders are making a mockery of their promises to increase aid by squandering public money on expensive technical assistance including overpaid consultants.
"The GMR (Global Monitoring Report) shows that the same amount of money needed to hire a consultant for 100 days would pay 100 teachers for a year."

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard d’Estaing

02.12.06

Olivier Giscard d’Estaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliñy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group


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