Communiqué

Group of 10 Communiqué

April 27, 1999

The Finance Ministers and Central Bank Governors of the countries of the Group of Ten met in Washington on 27^th April 1999. The meeting was chaired by Mr. Kaspar Villiger, the Minister of Finance from Switzerland, on behalf of Mr. Bosse Ringholm, the newly appointed Minister of Finance from Sweden and current Chairman of the Ministers and Governors. Ministers and Governors took note of reports from Mr. Henk Brouwer, Chairman of the Deputies of the Group of Ten; Mr. Michel Camdessus, Managing Director of the IMF; Mr. Lawrence Summers, Chairman of WP3 of the OECD; and Mr. Andrew Crockett, General Manager of the BIS.

Ministers and Governors discussed the prevention and management of international financial crises. They noted that the changes in the magnitude and nature of private capital flows to emerging markets over the past decade have greatly increased the importance of the private sector in the prevention, containment, and resolution of international financial crises. They welcomed the positive response of investors and creditors to recent improvements in policies and performance of some of the emerging market economies most affected by recent turmoil. Ministers and Governors agreed on the principle that debtors should honour their obligations and contracts. In this context, they discussed a number of ways for strengthening private sector involvement, including, for example, broadening and deepening relations between creditors and debtors; encouraging the inclusion of rollover options in debt contracts, the arrangement of contingent lines of credit, and other forms of market-based insurance, which might be used in conjunction with official financing; and modifying the terms of bond contracts to facilitate cooperative refinancing or restructuring negotiations during crises.

Ministers and Governors considered the issues raised by complementing private finance and multilateral liquidity support during severe financial crises with financing from bilateral official sources. They noted that it would remain up to individual governments to decide in each case whether to provide such bilateral support. They underscored that bilateral official liquidity support should generally be provided only in exceptional circumstances that pose systemic risks and only in connection with a credible adjustment programme supported by the international financial institutions. If bilateral official support were found to be necessary, the funds should be disbursed expeditiously and all bilateral official creditors should be treated equitably.