Economy and Financial Affairs
- Fri Jun 23 2006
Source:
Rede Brasil
Fabrina Furtado
On June 10-11, G8 Finance Ministers met in St. Petersburg, Russia, in preparation for the next summit of G8 Presidents to be held on July 15-17. The presidents of the World Bank and IMF, among others, were invited to participate in the event. Global financial stability, the issue of energy and the new role of the IMF were included in the agenda.
On June 10-11 2006, the Finance Ministers from the world’s seven wealthiest nations (the US, France, UK, Germany, Japan, Italy and Canada), plus Russia – the G8 – met in St. Petersburg, Russia, in preparation for the next summit of G8 Presidents to be held on July 15-17 of this year. Among those invited to participate in the meeting were Brazil (Guido Mantega), China, India, South Korea, Nigeria, Australia and South Africa, as well as the presidents of the World Bank, the International Monetary Fund (IMF) and the United Nations Conference on Trade and Development (UNCTAD). The main topics discussed were the following:
• The global financial stability and the new role of the IMF. In general, ministers concluded that in spite of risks, the economy continues to grow at a healthy pace and with stability, notwithstanding the recent stock market volatility, which according to ministers would be temporary.
Risks mentioned were:
• Rising interest rates in the US which may result in an economic slowdown;
• Huge current account deficit and cooling real estate market in the US;
• Rise in oil prices;
• The impact of oil prices on the global economy and the access of poorest countries to energy resources;
• The fight against protectionism and trade liberalization in agriculture, industrial goods, services and investments. They called for further efforts from all countries, aiming at successfully concluding the Doha Development Round, which is essential to “strengthen growth and reduce poverty”.
• They requested developing countries, mainly China and Brazil, not to encourage the indebtedness of poor countries and highlighted the importance of collaborating with other creditors. Brazil and China were mentioned by the US, Japan, Germany, the UK, France, Italy, Canada and Russia, as examples of countries that are undertaking loans that may be contributing to unsustainable debts, while developed countries are undergoing a process of debt cancellation. It was also mentioned that the cancellation process could even be explored by other creditor countries. The president of the World Bank says that it should be ensured that resources are used for development rather than for political purposes. Mantega (Brazil’s Economy Minister) supported the financing policy of the Brazilian government which now stops being a debtor country to become a creditor one, underscoring that the difference will lay on the fact that loan mechanisms will not include conditionalities.
• Energy-producing and energy-consuming countries were called on to facilitate investment in the energy sector, in order to improve energy efficiency, promote greater market transparency and develop a global common standard for reporting oil reserves. It was highlighted that “market mechanisms are vital for a good operation of the global energy system”.
• The IMF and World Bank were encouraged to work with both energy-producing and energy-consuming countries to develop guidelines and appropriate policies to mitigate the adverse impact of high and volatile energy prices.
• Developing countries were urged to reduce obstacles to private energy companies through the adoption of “clear-cut legislative and regulatory mechanisms”.
• Emphasis was laid on the private sector’s crucial role in energy services.
• They warned about the risk of an avian flu pandemic, which would require the drafting of contingency plans, also by the financial sector.
• They underscored the progress made on the exchange of information in tax matters and admitted the importance of financial education for improving the ability of people to use financial services.
• They stated that the G8 will continue to fight against money laundering and terrorism financing.
• They asserted that “responsible and effective management of public finances is of fundamental importance for achieving macroeconomic stability and sustainable growth”.
The energy issue was a focal point, since there are fears of an excessive energy reliance on energy raw materials. At the same time, it seems that the meeting’s major failure was exactly the energy issue. The only reference to the Energy Charter which advocates for the diversification of energy, was the acknowledgement to the “importance of principles” in the final document of the meeting. The agreement was signed by Russia in 1994 but has failed to be ratified since the country fears that the Charter may question the monopoly of the state-run Gazprom over Russia’s natural gas exports.
Russia aims to become a full-fledged member of the G8, since until now, Moscow has been left out of the debate on financial and economic issues on account of not yet having joined the World Trade Organization (WTO).
Related Information:
-> Russia and the 2006 Summit
-> G8 and the civil society process
|
|
