FROM THE OFFICE OF PUBLIC AFFAIRS

You have before you an extensive statement that spells out theconclusions of our meeting this afternoon.

Let me start by noting that this meeting is part of a processthat began at the Naples Summit almost three years ago whenPresident Clinton called for a review of the architecture of theinternational economic system. The following year, in Halifax,the Heads proposed some concrete and important steps to improveour capacity to deal with future financial crises and to reformthe international financial institutions, the major elements ofwhich are in place or well on the way to being put in place. Lastyear, in Lyon, our Leaders carried this process forward with newproposals to promote financial stability and reducing the debt ofthe poorest countries.

Today, we reached agreement in a number of important areasthat will help set the stage for the Denver Summit later thisyear.

Let me give you a sense of our discussion in several areas.

First, on the economic outlook and our discussion on exchangemarkets. There seems to be somewhat greater optimism about theoutlook for growth, but that was tempered by a recognition of themany challenges we each still face. Our joint statement reflectsa consensus on the main priorities for policy in each of oureconomies.

On the exchange markets, and this is a direct quote from ourstatement:

"We discussed developments in exchange and financial markets since our last meeting in Berlin where we noted that major misalignments in exchange markets had been corrected. We agreed that exchange rates should reflect economic fundamentals and that excess volatility and significant deviations from fundamentals are undesirable. In this context, we emphasized the importance of avoiding exchange rates that could lead to the reemergence of large external imbalances. We agreed to monitor developments and to cooperate as appropriate in exchange markets."

Second, we welcomed the extensive progress that has beenachieved on the Lyon Summit initiatives to promote financialstability, particularly the emerging consensus on a strategy tostrengthen financial systems in emerging markets.

Third, we endorsed a four part agenda of continued reform forthe International Monetary Fund, which includes greater attentionto growth-promoting, market-oriented reforms, capital marketliberalization, transparency, and governance.

Fourth, we agreed on the importance of a new initiative tosupport reform in Africa, which would include enhanced debtrelief under the multilateral debt initiative and IFI supportconditioned on further market opening. Michel Camdessus and JimWolfensohn joined us for part of our meeting today and pledgedenhanced support for countries that undertake ambitious reformand further integration with the global economy.

And finally, we have agreed to give new attention to a broadinternational intiative to combat corruption, which would includeaction by the OECD countries to criminalize and eliminate the taxdeductibility of bribes paid to foreign officials and an expandedset of measures by the IMF and the multilateral developmentbanks.

We also had a very useful discussion with our Russiancolleagues, who described the new economic team’s efforts todeepen reform and fight corruption.

All of the matters discussed today are important for the worldeconomy generally, and they are strongly in the economic andnational security interests of the United States.

I would be happy to take your questions.