Summers Statement

["ÁÎ×Ó¹â Henry C.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxx>]

FROM THE OFFICE OF PUBLIC AFFAIRS

FOR IMMEDIATE RELEASE
September 22, 2000
LS-902

         STATEMENT OF TREASURY SECRETARY LAWRENCE H. SUMMERS
                    AT THE PRE-G7 PRESS CONFERENCE

Good morning. While this is no time for complacency, these meetings in
Prague come at a time when
global economic conditions are better than they have been for some time.

I expect our discussions to focus on two areas: the global economic
situation; and the ongoing reform of
the International Financial Institutions (IFIs).

I. The Global Economic Outlook

This being the final G7 finance ministers' meeting of the Clinton
Administration, it affords some
opportunity to reflect on the first meeting I attended, in London in
February 1993. At that time, slow
growth and chronic public borrowing in the US were of major global
concern. How different the picture
looks today.

    Our economy continues to show strong growth with low rates of
inflation, and this year we will have
    achieved three consecutive years of unified budget surpluses,
totaling over $400 billion. But we must
    not take our economic expansion for granted. We must continue to
plan prudently: paying down the
    debt and maintaining fiscal discipline.

Looking beyond the US:

There have been welcome signs of stronger economic growth in all of the
other major industrialized
countries. But supportive policies continue to be essential, especially
structural reforms to raise productive
potential and investment and realize the opportunities afforded by new
technologies.

The emerging market economies have strengthened since the recent crises,
as recovery has taken hold
and financial vulnerabilities reduced. But here too, it will be crucial
to avoid complacency. Strong
follow-through on financial sector restructuring and other reforms will
be crucial.

    While the global fundamentals are sound, recent developments in oil
markets are obviously a
    concern for consumers and businesses and around the world. I expect
that energy market issues will
    be among those discussed in Prague this weekend. More stable prices,
in line with historic norms,
    are in the mutual interest of both oil producers and consumers.

    With regard to exchange rates, let me repeat the statement that was
released earlier today:

    "At the initiative of the European Central Bank, the monetary
authorities of the United States and
    Japan joined with the European Central Bank in concerted
intervention in exchange markets because
    of their shared concern about the potential implications of recent
movements in the euro for the
    world economy." The British and Canadian authorities also took part
in this operation, purchasing
    euros with their currencies.

Our policy on the dollar is unchanged. As I have said many times, a
strong dollar is in the national interest
of the United States.

II. Reform of the International Financial Institutions

Reform of the IMF:

We welcome the recent Board agreement to reform IMF facilities. These
changes will help to establish the
more focused and selective financing role for the Fund that the US has
strongly supported. In this context
and more broadly, we will also continue our discussions of private
sector involvement in the resolution of
crises. And, in line with recent progress toward reducing financial
vulnerabilities in the emerging market
economies, we will consider how the IMF could further integrate
indicators of national balance sheet risk
into its surveillance and programs.

Reform of the MDBs:

We want to address more fully the provision of support by the MDBs at a
time of financial crises. In
particular, we will urge the World Bank to consider how to expand the
use of the emergency financial
vehicles that it now has in place, and of the pilot programs they have
introduced to make more innovative
use of guarantees in support of proactive policy reform. We will also
address the need for greater
institutional accountability and transparency within the World Bank and
the MDBs more generally.

Support for the Poorest Countries:

We continue to be strongly committed to maximizing the effectiveness of
the HIPC debt relief initiative.
In Prague we aim to agree on clear and achievable conditions for
providing debt relief that enable the
funds to be provided as rapidly as possible, while ensuring there are
strong safeguards to maximize the
chances of success. We are also supporting concrete reforms to the
provision of assistance to such
nations, so that the recipients of HIPC relief do not get into the same
difficulties again.

We recognize that the US needs to do its part to keep HIPC moving
forward. We are working hard to
obtain Congressional approval of the President's pending requests for
HIPC funding and authorization so
that the US can fulfil its commitments.

We will also be calling for enhanced support for the provision of global
public goods, such as vaccines and
effective treatments for diseases such as HIV/AIDS and malaria, and
agricultural and environmental
research - including a multi-year program of increased Development Grant
Facility funding for such
projects within the World Bank.

Combating financial crime:

There is now widespread agreement that financial crime has the potential
to negatively affect the
international financial system. Given the natural fit between the
financial crime agenda and the IFIs' focus
on the integrity of the global financial system, their financial sector
work, and their promotion of good
governance, we are working to ensure that both institutions to play
their part in combating this problem.
These issues will be firmly on the agenda of both the IMFC and
Development Committee in Prague.