Economic stability essential
Economic stability essential
SANUR, Bali (JP): Finance ministers of the Asia Pacific
Economic Cooperation (APEC) forum reaffirmed yesterday the
crucial importance of macro-economic stability and balance to
enhancing longer-term investor commitment and exchange rate
stability.
The ministers said in a joint statement after the close of
their second annual meeting that reversal of capital inflows
could be minimized if governments demonstrated a commitment to
prudent fiscal and monetary policies which, in turn, lead to
macro-economic stability.
The meeting, which was opened by Vice President Try Sutrisno
on Saturday evening, discussed four major topics: recent economic
developments in the 18 member economies, capital flows, the
effects of exchange rate movements and resource mobilization for
infrastructure financing.
"We have decided to meet again in Kyoto, Japan, on March 17
next year to continue our discussions on those four topics," the
chairman of the meeting, Indonesia's Minister of Finance Mar'ie
Muhammad, said at a joint news conference.
Thirteen APEC member countries were represented by their
finance ministers and the five others by their deputy finance
ministers.
Mar'ie said the ministers exchanged views and experiences
regarding the management of capital flows because "we fully
realize that the surge in capital inflows could also be
disruptive".
Mexico's chief delegate, Under Secretary of Finance Jose
Julian Sidaoui, said the ministers' discussions also covered the
financial crisis his country experienced recently.
"The conclusion is that it is not good to rely too much on
portfolio, short term capital," Sidaoui said.
The ministers acknowledged that it was often difficult for
authorities to determine in advance whether capital inflows were
driven by short-term speculative motives or by longer-term
intentions.
"However, policies governing the macro-economic environment
play an important role in encouraging longer-term investor
commitment," the four-page statement said.
Moreover, the ministers added, the maintenance of macro-
economic and financial market stability is a key requirement to
achieving free and open trade and investment in the region by
2020, the year targeted by APEC economic leaders for complete
trade deregulation at their summit in Bogor, West Java, last
November.
The six-year-old APEC forum groups Australia, Brunei, Canada,
Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia,
Mexico, New Zealand, Papua New Guinea, the Philippines,
Singapore, Chinese Taipei, Thailand and the United States.
The ministers asked the International Monetary Fund to
consider ways of improving current mechanisms to respond
effectively to problems of financial market stability.
They admitted that inadequate information about an economy
could be one reason for rapidly shifting capital flows.
"Therefore, we believe that increasing the availability of
economic and financial information about our economies can play
an important role in enhancing the confidence of the financial
markets in the strength of regional fundamentals," they added.
The meeting agreed to develop recommendations regarding
voluntary public disclosure, on a regular basis, of economic and
financial information.
The ministers expressed support for international anti-money
laundering efforts in the region and encouraged adherence to the
international standards.
Infrastructure
The ministers underlined the need for coordination of public
and private resources in financing infrastructure development in
view of the increased role of domestic and external private
financing in that sector.
In another effort to strengthen the institutionalization of
the finance ministers forum, the meeting asked the deputy finance
ministers to set up a working group to advance the ministers'
work in three areas: financial and capital markets, financial
mobilization for infrastructure development and the effects of
exchange rate movements on trade and investment.
"Our deputies will meet in Washington, DC, in coincidence with
the joint meeting of the World Bank and the IMF in October,"
Mar'ie said. (vin)