Commonwealth Finance Ministers to Seek Common Position Ahead of IMF and World Bank Meetings
10 September 1996
Commonwealth Finance Ministers will meet in Bermuda from 25-26 September in preparation for the annual meetings of the International Monetary Fund and the World Bank in Washington the following week. The Ministers will discuss a range of issues from multilateral debt to money laundering, as well as focusing on this year's special theme, Private Capital Flows and Development: the Role of National and International Policies.The theme was chosen following widespread concern about the implications of Mexico-type crises for the global financial system and the risks associated with the volatility of private capital flows. The Ministers will discuss the adequacy of existing international arrangements for emergency financing and the feasibility of other innovative proposals advanced recently by the G10 on insolvency and orderly debt work-outs.
Over the years Commonwealth Finance Ministers' Meetings have become a useful forum for launching important initiatives on debt relief for highly indebted poor countries. As Chancellor of the Exchequer, Britain's Prime Minister the Rt Hon John Major launched the Trinidad and Tobago terms at a Commonwealth Finance Ministers' Meeting in 1990. These were taken on board by the Paris Club and eventually became the "Naples Terms". Similarly, a proposal for multilateral debt relief was also launched at a Commonwealth Finance Ministers Meeting in Malta in 1994 by Britain's current Chancellor of the Exchequer, the Rt Hon Kenneth Clarke. Mr Clarke's proposals, which included the sale of a part of the IMF's gold reserves to generate investment income, were strongly endorsed by his Commonwealth colleagues. They have fuelled considerable debate and discussion within the international financial institutions concerned and among their members.
This process has led to a growing recognition that there was a multilateral debt problem which required a comprehensive approach for its resolution. Commonwealth efforts to forge consensus in this area included the Commonwealth Secretary-General Chief Emeka Anyaoku writing to G7 leaders, prior to the Lyon Summit, urging support for its position. Following the impetus given at the Lyon Summit, Ministers will seek in Bermuda to substantially strengthen the current proposals on multilateral debt relief in relation to eligibility criteria, waiting period, funding arrangements and equitable burden sharing among multilateral creditors themselves and between bilateral and multilateral creditors.
The uncertainty surrounding IDA will also figure prominently in the Bermuda discussions. The increasing doubts about the US fulfilling its commitment to IDA-10 could unravel the carefully crafted agreement on IDA-11. Ministers are likely to express their concern that an IDA in crisis could risk undermining the economic reform process and support for poverty reduction in the poorest countries. In this context, they will be considering the future role of IDA as an instrument of development co-operation and whether a Commonwealth initiative could be launched to break the present impasse.
A comprehensive strategy for combatting money laundering is expected to be endorsed by Ministers which will include raising standards to the minimum set by the Financial Action Task Force's 40 recommendations. The strategy, which was drawn up by Commonwealth financial and legal officials over the past year, establishes guidelines for banks and other financial institutions to track money laundering and involves regional initiatives.
The Bermuda meeting will also discuss the implementation of the Commonwealth Private Investment Initiative (CPII) which was agreed by Ministers at their last meeting in Kingston, Jamaica, and endorsed by Commonwealth Heads of Government at their Summit in Auckland in November last year. The CPII seeks to channel long-term commercial investments into expanding privatised or privatising companies, new ventures and small-or medium-sized private sector enterprises. In this connection, Ministers will note that the Commonwealth Africa Investment Fund (US$62.5 million) has already been launched in collaboration with the Commonwealth Development Corporation at Marlborough House in London (July 1996). This was the first of a series of regional funds to be established under CPII. Proposals for launching other regional funds, in particular for the Pacific and the Caribbean, will be discussed at the meeting.
Ministers are also likely to review implementation of Uruguay Round agreements and consider progress on a number of new issues, including labour and environmental standards on the international trade agenda, in preparation for the major WTO meeting, in Singapore, later in the year.
Given the timing of their meeting, a number of IMF and World Bank issues will also be discussed such as the Fund's resource position and the Eleventh Quota Review, SDRs, access levels and the design of programmes and sequencing of policies. On the World Bank, Commonwealth Ministers will focus on the question of "change management" that is underway to transform its culture, lending levels and net negative transfers, the funding shortfall for the Special Programme of Assistance to Africa (SPA), and the Bank Group's activities in the areas of poverty reduction and private sector development.
Following their meeting, a group of Commonwealth Finance Ministers, including G7 members Britain and Canada, will hold a press conference in Washington, D.C., prior to the Interim and Development Committee meetings to report on the outcome of the Bermuda meeting and discuss proposals they intend to pursue at the IMF/World Bank Annual Meetings. This group will comprise the Hon S M Kibria, Minister of Finance, Bangladesh, the Rt Hon Kenneth Clarke, Chancellor of the Exchequer, Britain, the Hon Paul Martin, Minister of Finance, Canada; and the Hon Dr Omar Davies, Minister of Finance, Jamaica. Commonwealth Secretary-General Chief Emeka Anyaoku will act as chairman. The press conference will be held in Room J1050 (first floor), World Bank at 09.30 a.m. on Saturday, 28 September 1996.
Issued by the Information and Public Affairs Division, Commonwealth Secretariat,
Marlborough House,
Pall Mall,
London SW1Y 5HX,
United Kingdom.
Tel: 0207-839 3411;
Fax: 0207-839 9081;
Telex: 27678
96/41 10 September 1996
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