Mr. Arun Shourie

at the 
International Conference on Financing for Development

Monterrey, Mexico 
18th March 2002

I join all colleagues here to thank the Government of Mexico for its warm hospitality and for hosting this Conference.

 Mr. Yashwant Sinha, the Finance Minister of India, who is the current Chairman of the G-20, has not been able to be here today because of pressing parliamentary commitments at home. I am therefore making this statement on his behalf.

 Established in 1999, the G-20 is a comparatively young and youthful forum. Its significance lies in the fact that it represents an operational microcosm of stakeholders in the North-South dialogue. It brings together the G-7, the developing countries and the Bretton Woods institutions.

 As earlier speakers have already mentioned and as the Document mentions, we are passing through turbulent times. The current economic slow-down and the heightened risk aversion for private financial flows have adversely affected developing countries. These trends can be reversed only by giving a new direction and content to international cooperation. The G-20 is committed to working together with the international community and international institutions to promote policies that will make globalization meaningful.

It is well recognized today that, like any other economic transformation that will eventually bring an array of boons for everybody, in the interim globalization can compound the difficulties for the world’s poorest and most vulnerable. In Montreal in 2000, we agreed that to reverse these difficulties, we would require greater access to markets, capital and ideas and a greater capacity to achieve rapid and enduring growth in living standards and to simultaneously attack income inequalities and reduce poverty.

 In order to meet the challenges ahead, since 1999 the G-20 has seen a consensus emerge, among other things, to, first, further improve the effectiveness of international institutions that are fundamental to a strong and stable global financial system; second, to implement policies that will reduce the vulnerability of countries to financial crises; third, to create more favourable conditions for the integration of the heavily indebted poor countries into the global economy; fourth, to improve the integration of emerging economies into the international financial structure; fifth, to promote the design and effective implementation of social safety nets, so that the most vulnerable groups within society are protected during the process of liberalization; and, finally, to strengthen our efforts to combat the abuse of financial instruments and channels, including money laundering, tax evasion and corruption.

 Thus there is a clear convergence of some of the crucial themes of this Conference and the approach of the G-20 to these issues. Among these issues, I would like to mention in particular the strengthening of the international financial system and reducing its vulnerabilities, so that it provides equal opportunities to all and so that it ensures that private financial flows become sustainable channels of equitable development and globalization.

In particular, the G-20 has focused on ways to reduce the frequency and civility of financial crises. Some of the key initiatives and policies that are being discussed within the G-20 and which also occasion detailed discussions during the Preparatory Committee meetings of this Conference are the following.  First, the choice of exchange rate regime must be supported both by appropriate macroeconomic policies at home and sound financial institutions. It was also recognized that there is a spectrum of possible exchange rate arrangements and no single arrangement is necessarily right for all countries for all times; secondly, a comprehensive strategy must be evolved to reduce vulnerability of countries to financial crisis. This requires that we pay attention to liability management, including the effective management of sovereign liabilities, appropriate consideration of the external financial situation of the private sector and effective and transparent regulation and supervision of the financial sector.

Thirdly, weaknesses in financial regulation and supervision that incorporate governance in the disclosure of economic and financial data and in the transparency of macroeconomic policies have also played their part in recent financial crises in some parts of the world. This has highlighted the importance of promoting international codes and standards to address these weaknesses. For this purpose, the technical and financial resources that are required for complying with international standards and codes that are involved and for monitoring compliance should be made available to developing countries.

At our last ministerial meeting, held at Ottawa, held in the shadow of 11 September, we resolved to combat terrorism by adopting the G-20 Action Plan for Combating Terrorist Financing. We are committed to ensuring that there shall be no safe havens for the finances that are used for terrorism. The G-20 has also reaffirmed its commitment to free trade, in particular to ensuring better access to international markets. Help those who are willing and enable those in want. That, perhaps, sums up the efforts of the G-20.

The G-20 will work and strive to build a consensus on the complex issues that face all of us. We need to ensure that globalization translates into tangible benefits for all into a kind of growth whose glow is felt by all. For that to happen, it is imperative that the entire international community, civil society and private enterprise are mobilized in this endeavour and that they work together. This Conference marks a significant step in this direction. In a word, the G-20 stands committed to helping further both the objectives and the outcomes of this Conference.

* The text of this statement has been transcribed from audio recordings as the original was not submitted to the Secretariat.

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