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FROM THE OFFICE OF PUBLIC AFFAIRS September 14, 1998RR-2678 1. Finance Ministers and Central Bank Governors of the G-7 countries have
been in close
contact over the last few days to discuss developments in the world economy and global financial
markets and to explore ways to respond to the challenges now facing the international financial
system. 2. In light of the exceptional pressures in financial markets and deteriorating prospects for
growth in many parts of the world, the Ministers and Governors agreed on the following
approach. 3. First, they agreed that inflation is low or falling in many parts of the world. They
welcomed some encouraging developments as regards domestic demand growth in continental
Europe. Nevertheless, in view of the slowdown in demand in a number of economies, especially
among emerging market economies, the balance of risks in the world economy had shifted. They
emphasized their commitment to preserve or create conditions for sustainable domestic growth
and financial stability in their own economies. In this context, they noted the importance of
close cooperation among them at this juncture. 4. Second, the Ministers and Governors welcomed the courageous measures taken in many
emerging economies and the significant progress made in laying the foundation for stability and
recovery. They agreed to explore ways to reinforce the existing programs, in support of
growth-oriented policies, with accelerated efforts to promote comprehensive programs for
corporate and
financial sector restructuring, improved transparency of policy-making. In addition, they agreed
to consider measures to alleviate the effects of the crisis on the poorest segments of society,
including if necessary through the provision of augmented financial assistance centered in the
multilateral development banks. 5. Third, the Ministers and Governors emphasized that the adverse developments in the
external environment make it particularly important that countries take appropriate steps to
strengthen policies and improve confidence. Countries that embrace unilateral action on debt as
a substitute for reform and cooperation hurt the prospects for their own economies and the world
system. 6. Fourth, the Ministers and Governors agreed to support a cooperative international
approach to support those countries that have been adversely affected by recent developments in
global markets and which are implementing strong economic programs. They expressed concern
about the extent of the general withdrawal of funds from emerging markets without respect to the
diversity of prospects facing those countries and the significant progress that has been made in
many countries in carrying out strong macroeconomic policies and structural reforms that
enhance long-term growth prospects. They agreed on the urgency of the early implementation of
the IMF quota increase and establishment of the New Arrangements to Borrow. 7. Finally, they agreed to continue to support the provision of financial assistance from the
IMF, which will remain at the center of the system, in support of strong policies, and including in
parallel with the private sector. In this context, they drew attention to the possibility, if
circumstances so warrant, of activating the General Arrangements to Borrow, in consultation
with other participants in the arrangements. They also support an active role for the World Bank
and the other MDBs in cooperating with and providing finance and technical assistance to
support their member economies in this difficult time, with a particular focus on support for the
vulnerable groups in society and for financial sector restructuring. 8. The Ministers and Governors will continue to consult closely among themselves and with
the major financial institutions in their countries that have a key interest in the smooth and
efficient operation of markets and promotion of financial stability.
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