FROM THE OFFICE OF PUBLIC AFFAIRS

Let me give you a quick summary of the highlights of our meeting this afternoon.

First, on the economic outlook, we agreed that the crucial challenge for the G-7 in the year ahead is to achieve sustained balanced expansion in the G-7 economies. It is clear that we each face different policy requirements for sustaining and strengthening expansion.

We heard an interesting presentation from our European colleagues about how they are addressing the challenges of strengthening growth, placing fiscal deficits on a sustainable path, and implementing structural reforms to reduce unemployment. We also reviewed recent developments toward European Monetary Union.

The Japanese continue to face an important challenge in maintaining the supportive macroeconomic policy stance necessary to promote a strong domestic-demand led recovery, implementing structural reforms to open the Japanese economy, and policies to strengthen the banking system. I think it's fair to say that these concerns merit a fair amount of attention going forward.

In our discussion, we briefed our G-7 colleagues about the balanced budget proposal President Clinton submitted to Congress on Thursday. This budget builds on the progress we have made thus far in reducing the federal deficit by 60 percent while focusing public and private investments on programs, like education and aiding America's inner cities, which will increase our productivity long-term. It is our belief that the President and Congress have not been this close to reaching agreement on a budget leading to a balance in nearly 30 years. We will work diligently to reach this objective.

On the exchange markets, let me read a statement that reflects our common view:

"The Ministers and Governors discussed developments in exchange and financial markets. We believe that major misalignments in exchange markets noted in our April 1995 communique have been corrected. We reaffirmed our views that exchange rates should reflect economic fundamentals and that excess volatility is undesirable. We agreed to monitor developments in exchange markets and to cooperate as appropriate."

And let me add what I said yesterday. A strong dollar is in the United States interest. We have had a strong dollar for some time now.

Finally, we reviewed progress on a number of initiatives now underway to strengthen the world financial system and reform the international financial institutions. In this context, I reaffirmed the President's pledge to meet our past commitments to these institutions and to provide our share of future programs. These institutions play a critical role in advancing our interest in a strong and secure global economy, and they also generate jobs and exports for the American people. Supporting these institutions is profoundly in the U.S. security and economic interests.

The next time we meet, I will be welcoming my G-7 counterparts to Washington, D.C., where we will continue our preparations for Denver. It will be our honor to see them there.

I would be happy to respond to your questions.