Transcript

Transcript of the G-24 press conference

October 3, 2009

Ms. Nardin Good afternoon, welcome to the press conference of the G24. I will now ask Mr. Mayaleh to say a few introductory words, we will then take questions.

Mr. Mayaleh - [Through Interpreter] Thank you very much. Good afternoon, ladies and gentlemen. As you are aware, the Ministers of the Group of Twenty-Four on International Monetary Affairs and Development held their 82nd meeting here this morning in Istanbul. The Ministers welcomed the positive developments indicating the beginning of emergence from global recession and the positive developments in a number of developing countries participating in this recovery. Nonetheless, the world economy remains exposed to substantial challenges, and in particular the developing countries are paying a very high price in terms of substantial slowdown of their growth. At the same time, there have been large employment losses and rising poverty, and hence it is essential to persevere with anticyclical fiscal and monetary policies as well as actions to revive credit and promote jobs and safety nets until a strong recovery has been achieved, but at the same time, in order to limit fears of inflation, it is important to explain and coordinate strategies, and this particularly in the developing countries.

We welcome the responses of the international financial institutions to the crisis, but we call upon them to even greater efforts. In particular, the IMF should strengthen its surveillance role by stressing macro-financial stability, and in this connection surveillance of the countries and financial systems of systemic importance should be evenhanded and more effective. We also want the IMF to play a greater role in promoting a more stable, more predictable international monetary system, including with respect to the main reserve currencies by expanding in particular the role of SDRs. The IMF should also improve its own instruments for financing used on a precautionary basis to provide an alternative to the self-assurance by building up of reserves.

As to the World Bank, in this respect it is important -- I should point out that the IMF increase resources designed to strengthen capacity building and also they should not have countries have to pay for technical assistance. The Group of 24 remains deeply concerned by the low level of concessionary aid to low-income countries. It has also called for a new replenishment of IDA resources in order to preserve the financing levels for the years to come. The Group of 24 agreed with the proposal to establish a crisis response facility within the IDA, but it is important that these resources be incremental to IDA itself. The idea being also to enable IDA-eligible countries to have access to IBRD resources, and we welcome this. We are in favor of setting up an appropriate and transparent mechanism for that purpose. We invite the donor community to support these incremental financing needs as well as to deliver on their earlier commitments to provide concessional resources which are required if the Millennium Development Goals are to be met.

The key issue in our view remains finding a remedy to the democratic deficit which we see in the governance structure of the World Bank and the IMF by giving greater voice to the developing countries. This is of great importance to enhance the legitimacy and the effectiveness of the two organizations. We in the Group of 24 have undertaken to secure the swift ratification of the reforms of the IMF adopted in April 2008, but these reforms are only perceived as an initial step, and a political commitment remains essential in order to achieve a transfer of 7 percent of quotas from the developed to the developing countries, and this transfer should be the result of a thorough-going reform of the method of calculation of voting power in order to make it possible to have more access to IMF financing for these countries. At the same time, this should not be to the detriment of other developing countries. The aims for the World Bank should be even greater in terms of organization, with a shift of 6 percent of voting power from the developed to the developing and transition countries, and this without dilution of the voting power of the developing countries, and while preserving the gains of the first phase of the voice reforms in that institution, and now I would be very happy to hear your questions.

Question - I was wondering how you feel about the composition of the G-20. As you know, it has moved into a greater role for itself in the global economy, and I was wondering whether you think that should be expanded to include other economies as well. What do you think that the role is of the G-20 in the rebalancing of global growth and what should the role of the dollar play?

Mr. Mayaleh - [Through Interpreter] As you are aware, the G-24 is much older as a group than the Group of 20, there are some G-24 countries which are also members of the G-20; for example, Brazil, India, and South Africa. And two of those countries are now Chairman and First Vice Chairman of the Group of 24, and we heard and welcomed the proposal made by Brazil, which is a member of both the G-20 and the G-24, and the proposal made by the Brazilian Minister was to serve as a presence for the G-24 within the G-20 group.

Question - [Through Interpreter] In your communiqué you talk about doubling the size of quotas. Could you explain what you are seeking by such a doubling of quotas? Do you want to have a global pool of reserves because you also referred to some of the IMF instruments? Would that be one and the same thing or are they two different concepts?

Mr. Mayaleh - [Through Interpreter] In our communiqué we talked about a transfer of quotas to the tune of 7 percent of quota shares from developed to developing countries, and what we said in the communiqué is that this shift should take place as quickly as possible, and this within the framework of a thorough-going review of the quota share calculation formula. As you know, the G-7 talked about 5 percent, and the G-24 is talking about 7 percent.

Mr. Bhattacharya - As you know, the IMF received a very large increase in temporary resources through the New Arrangements to Borrow, and that allowed the IMF to respond to this crisis, but what it has also shown is that the IMF needs a permanent capacity to be able to help its members, that it needs better precautionary instruments so that countries do not have the incentives for self-insurance, and the view of the group, as reflected in the communiqué, is that the IMF must remain a quota-based institution and that there should be at least a doubling of quotas; and, second, that that doubling of quotas should be linked, as the Chair was pointing out, to a significant shift from the developed world to the developing world.

Mr. Studart - I am representing Minister Guido Mantega, Minister of Finance of Brazil, and we had the honor to accept the chairmanship this year, and following the leadership of our Chair, the Minister has done wonderful work. Allow me to say a little bit of how we see this group, and what we propose for the agenda of the group. First, let me address some interesting question of the G-20, the composition, if you allow me, Chair, a little bit to complement what you have said. I remember that you asked me the same question a year ago, and I said to you that the intention of Brazil and other members of the G-24 is to be as inclusive as possible in the needed reform of the international financial architecture. We have been working together for that inclusion. You have to understand, we all understand that the G-20 as a forum of leaders was created in a moment of crisis, but it has become a forum which led to more inclusion of the voices of those who were never heard in this discussion on international issues, and now we want more inclusion. We think it is important that we have more inclusion in order to have what I would call a more inclusive process of world development and globalization, so it is something that we haven't had so far, and for that reason we are all suffering the consequences of that. So Brazil has the privilege, and I think also the burden, to be one of the members of the G-20, and in view of this need of inclusion, Minister Guido Mantega has proposed, and the proposal has been accepted, to take the idea of having a permanent seat of the G-24 in the G-20. We are talking of something that is not temporary and not just as observer, a temporary seat of the G-24 to discuss issues related to reforming of the international fora.

It has to do with the belief that this forum, the G-24, has been very consistent in voicing the interests of all developing world, at least when it comes to these issues. Of course, we still have -- we always like more and more inclusion. Brazil does not only want to be the champion of soccer and Olympics but also poverty alleviation and social inclusion and international inclusion hopefully. We are very ambitious about that because we have too many problems that we know how to share our lessons in these things.

Furthermore, we want to continue using the forum and exploring the G-24 as a platform to voice the interests of developing countries. We want also to express our desire to do more south-south cooperation and use the platform of the G-24 for that and continue our struggle to reform the international financial institutions with a unifying voice. The interesting thing, those that have been following the work of the G-24 for the past year, is the consistency of the goals that we want to achieve, and if you look at the performance of the way that those G-24 members that are in the G-20 is they are basically taking to the G-20 the same flags that we have been supporting for many, many years. Of course, we cannot always win all the flags in a multilateral debate. We all know that. But at least you can be sure that those countries that are G-24 and G-20 at the same time were flagging the same consistent message that we have had in the G-24 for years. We are going to continue to do that, and we hope to have a more inclusive process of world and social development. Thank you.

Question - Are you suggesting that the G-20 should become the G-21 then or are you suggesting that Brazil should take on a permanent role of representing the G-24 in the G-20?

Mr. Studart - The suggestion of Mr. Guido Mantega is that the G-24 have a permanent seat. Once there is a new Chairman of the G-24, that person will be representing the G-24 at the meeting. We are not proposing a G-21, but remember that the structure of the G-20 was created for another purpose in a forum of ministers, and that structure is likely to change as well according to the needs both of the interests of the group but also in the interests of including more without losing the efficiency. So the number per se is not, but the idea clearly is to be more inclusive because we believe that the reform of the international financial institutions and system, and also the world economic order is of interest of everyone. We all are world citizens.

Mr. Bhattacharya - If I could add to that, in the G-20, the European presidency, which represents a large number of European countries, 27 countries, has a voice, so by including the G-24 as a single seat, you buy in a level of inclusion that is much more than one seat. You allow for a significant broadening, both in terms of voice there but also in terms of dissemination and connectivity, so it is a very efficient way for making the G-20 an inclusive process, which is what Mr. Studart was pointing.

Ms. Nardin - Thank you very much. This concludes the press briefing on the G-24. Thank you all for coming, and again copies of the communiqué are available outside. Thank you.