Global Policy Forum

New York -- The heads of State and government of the group of seven industrialized countries and the Russian Federation -- the Group of 8 -- are being asked by United Nations Secretary-General Kofi Annan to adopt policies favouring more balanced patterns and higher levels of output growth, to consider additional steps to protect the international financial system against instability, to take quick action to reduce the debt of the poorest countries and to increase development aid. The actions are advocated in a letter sent to German Chancellor Gerhard Schroder, Chair of the Group of 8, in advance of the Group's 18 to 20 June summit.

Such measures are urgently needed, the Secretary-General says, because recent financial crises have reversed in a matter of months the economic and social gains of many decades, returning large sectors of the world population to impoverishment and, in a period of low economic growth, threatening to lease billions in perpetual misery. "The internationally agreed goals of poverty eradication and social progress in the developing countries are simply not achievable so long as world output continues to grow at its present sluggish rate", the Secretary- General says in his letter. In addition, the slowdown is "aggravating the imbalances in trade among the leading industrial Powers, thereby threatening the stability of the international financial system".

Secretary-General Annan says that existing United Nations proposals for strengthening the international financial system "merit serious consideration", and urges that additional measures be taken "to prevent the recurrence of devastating crises like those of 1997-98". The United Nations position paper on financial architecture, issued in January, calls for making greater liquidity available to fight off financial contagions, the creation of regional reserve funds, the establishment of debt standstill mechanisms and closer oversight of capital markets, while defending the right of developing countries to determine their own capital control and exchange rate policies.

The Secretary-General's positions on financial reform, debt relief and development assistance are underscored by similar viewpoints in a statement by African finance and development ministers who met 6 to 8 May in Addis Ababa, under the auspices of the United Nations Economic Commission for Africa. The statement of the African finance ministers has been forwarded to the Organization for Economic Cooperation and Development for delivery to Chancellor Schroder and the Group of 8.

In his letter, Secretary-General Annan welcomes the emerging consensus that bold measures should be taken quickly to relieve the debt burden of the poorest countries, but says that further action is needed and cautions that such relief should not come at the expense of official development assistance (ODA). He also calls for a commitment to reverse the decline in ODA and to explore innovative ways to mobilize additional resources for development.

"There is a grave risk that the bulk of the world's population will be left on the margin of today's liberalized global economy, living in abject poverty", the Secretary-General warns. "It is the responsibility of all of us to redouble our efforts to ensure that this does not happen."