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18 November 2001

Text: IMFC Urges Anti-Terrorist Financing Measures By Feb. 1

(In final communiqué, endorses IMF action plan) (1910)
The International Monetary and Financing Committee (IMFC) is urging
its member countries to put in place strict anti-terrorist financing
measures by February 1, 2002.
In a final communiqué following its November 17 meeting in Ottawa,
Canada, the IMFC endorsed the International Monetary Fund's (IMF)
action plan to stop the financing of terrorism by:
-- extending the IMF's involvement beyond anti-money laundering to
efforts aimed at countering terrorism financing;
-- expanding its anti-money laundering work to cover legal and
institutional frameworks;
-- accelerating its program of Offshore Financial Center assessments;
-- helping countries identify gaps in their anti-money laundering and
anti-terrorist financing regimes;
-- enhancing its collaboration with the (Financial Action Task Force)
FATF on developing a global standard; and
-- increasing technical assistance to enable members to implement
effectively the agreed international standards.
The IMFC also called for "vigorous reforms" of the Japanese banking
and corporate sectors and for Europe to accelerate labor and product
market reforms.
The committee said advanced economies should allow automatic
stabilizers to operate and urged countries to "stand firm" against
protectionism. It said developing countries should improve access to
their markets and reduce trade-distorting subsidies.
It said the IMF should be ready to adjust its policies if necessary to
help poor countries recover from the events of September 11. It also
said the private sector was critically important in preventing and
resolving financial crises.
The committee encourages the heavily indebted poor countries to
continue to work toward meeting the conditions that will secure access
to debt relief by maintaining sound economic policies.
Finally, it said that advanced economies must be prepared to provide
increased development assistance and debt relief.
Following is a text of the communiqué:
(begin text)
Communiqué of the International Monetary and Financial Committee of
the Board of Governors of the International Monetary Fund
November 17, 2001
1. Recognizing the need for a determined and cooperative policy
response to the challenges facing the world economy, the International
Monetary and Financial Committee held its fourth meeting in Ottawa on
November 17 2001, under the Chairmanship of Mr. Gordon Brown,
Chancellor of the Exchequer of the United Kingdom. The Committee
expresses its gratitude to Finance Minister Paul Martin and the
Canadian government for hosting this meeting and for the excellent
arrangements.
2. The Committee notes that the September 11 terrorist attacks have
prolonged the slowdown in the world economy. Bold policy action has
already been taken to support a robust recovery during 2002, but the
outlook remains subject to considerable uncertainty. Continuing
vigilance is needed, and it is essential that the international
community stands ready to take timely action to maintain stability and
invigorate growth. The Committee welcomes the Managing Director's
October 5 statement on the situation of the world economy and the IMF
response, which outlines a collaborative approach to give a new
momentum to the world economy. The IMF has a central role to play,
including through a strengthened focus on surveillance, in ensuring
global macroeconomic and financial stability and in ensuring that
globalization works for the benefit of all.
3. The advanced economies have a key responsibility to promote early
recovery in global growth. The recent easing of monetary policy in the
United States, the euro area, and other advanced economies is welcome,
and the authorities stand ready to take further action if appropriate.
While the scope for discretionary fiscal policy action varies across
countries, the advanced economies should allow automatic stabilizers
to operate. The Committee stresses that determined implementation of
structural reforms to take advantage of the promise of technology for
increased productivity is important to restore confidence and growth.
Japan, in particular, needs to move ahead with vigorous reforms of its
banking and corporate sectors, and Europe should give priority to
accelerating labor and product market reforms. The United States
stands ready to take further action to support growth, consistent with
maintaining sound public finances in the medium term.
4. Increased trade opportunities will play a vital role in the
recovery, and the Committee strongly welcomes the outcome of the Doha
meeting of the World Trade Organization and the Doha Development
Agenda. All countries should stand firm against protectionist
pressures, and the advanced economies, in particular, should improve
access to their markets and reduce trade-distorting subsidies both for
the benefit of their own citizens and to provide critical support for
developing countries. The IMF should strengthen its surveillance of
these issues and help promote international efforts to open markets.
The Committee is vigilant on stability in the oil market at prices
reasonable for consumers and producers.
5. Emerging markets and developing countries are facing a weakening of
global demand, reduced capital flows, higher risk aversion in
financial markets, reduced income from tourism, and lower and more
volatile commodity prices. Sound and proactive policies in these
countries will be critical. The IMF stands ready to provide additional
financial assistance, where needed, to those countries pursuing sound
policies. The IMF has a range of instruments available and its current
financial position is strong. The IMF should be ready to adjust its
policies if necessary. The Contingent Credit Line (CCL) is an
important signal of the strength of countries' policies and a
safeguard against contagion in financial markets, and the Committee
encourages eligible countries to consider applying for it. The
Committee also underscores the critical importance of involving the
private sector in the prevention and resolution of financial crises.
The Committee recommends an early implementation of the Fourth
Amendment.
6. The Committee expresses particular concern at the adverse impact of
the global slowdown on low-income countries and heavily indebted poor
countries (HIPCs). It calls on the IMF, in close collaboration with
the World Bank, to respond flexibly and proactively to the needs of
these countries, including through additional concessional financing
and debt relief where appropriate. The Committee welcomes the
additional contributions to the Poverty Reduction and Growth Facility
(PRGF), and encourages further contributions. The IMF, working closely
with the World Bank, should intensify its efforts within the Poverty
Reduction Strategy Paper (PRSP) framework to assess the poverty and
social impacts of reforms on the poor. The Committee looks forward to
discussing the findings of the PRGF and the PRSP Reviews at the Spring
Meetings next year. The enhanced HIPC Initiative framework provides
for the consideration of additional assistance at the completion point
if there has been a fundamental change in a country's economic
circumstances due to exceptional exogenous shocks. The Committee
recognizes the need to take into account worsening global growth
prospects and declines in terms of trade when updating HIPC Initiative
debt sustainability analyses at completion point. It encourages the
heavily indebted poor countries to continue to work expeditiously
toward meeting the conditions that will secure access to debt relief
and ensure its effective use, including through the maintenance of
sound economic policies. Advanced economies must also be prepared to
meet their special responsibility in providing increased development
assistance and debt relief to tackle the increased challenges of
poverty reduction, and to achieve the Millennium Development Goals.
The Committee reiterates the importance of fully financing the
enhanced HIPC Initiative, and it urges bilateral donors to fulfill
this commitment.
7. Recognizing the importance of close collaboration and effective
partnership among the community of international institutions in this
endeavor, Committee members look forward, with their colleagues in the
Development Committee, to their joint discussion with the U.N.
Secretary-General, Mr. Kofi Annan, on how best to work together to
meet the challenges ahead, including in the context of the upcoming
Conference on Financing for Development.
8. The Committee expresses grave concern at the use of the
international financial system to finance terrorist acts and to
launder the proceeds of illegal activities. It therefore calls on all
member countries to ratify and implement fully the UN instruments to
counter terrorism, particularly United Nations Security Council
Resolution 1373, and welcomes and supports the Special Recommendations
of the Financial Action Task Force (FATF) to combat terrorist
financing. Each member should freeze, within its jurisdiction, the
assets of terrorists and their associates, close their access to the
international financial system, and, consistent with its laws, make
public the list of terrorists whose assets are subject to freezing and
the amount of assets frozen, if any, with monthly reports. The fight
against money laundering and the financing of terrorism requires the
active participation of both financial intermediaries and the public
sector. The Committee endorses the IMF's action plan to intensify,
where consistent with its mandate and expertise, its contribution to
this global effort, namely by:
-- extending the IMF's involvement beyond anti-money laundering to
efforts aimed at countering terrorism financing;
-- expanding its anti-money laundering work, including through FSAPs,
to cover legal and institutional frameworks;
-- accelerating its program of Offshore Financial Center assessments,
and undertaking onshore assessments in the context of the FSAP;
-- helping countries identify gaps in their anti-money laundering and
anti-terrorist financing regimes in the context of Article IV
voluntary questionnaires;
-- enhancing its collaboration with the FATF on developing a global
standard covering the FATF recommendations, and working to apply the
standard on a uniform, cooperative, and voluntary basis; and
-- increasing technical assistance to enable members to implement
effectively the agreed international standards.
In addition, the Committee urges further international action to
combat the financing of terrorism, and calls for:
-- all countries to establish financial intelligence units to receive
and process reports of suspicious transactions from the country's
financial sector, and to monitor and analyze suspected terrorist
funds;
-- provisions to ensure the sharing of information and cooperation
between national financial intelligence units, building on the work of
the Egmont Group; and
-- the deployment of technical assistance to ensure that every country
can play its part, based on support either bilaterally or through an
international trust fund.
Countries are urged to take these measures as soon as possible,
preferably by February 1, 2002.
The IMF should report on progress at its spring 2002 meeting, with a
full report at its Annual Meeting.
9. The Committee encourages the IMF to continue to strengthen its
surveillance and crisis prevention, including through the
implementation of standards and codes (and related technical
assistance), and emphasizes that these remain key priorities. It calls
on the IMF to implement the agreed framework for private sector
involvement, and to intensify the ongoing analysis of outstanding
issues. It welcomes the progress on improving the effectiveness of
conditionality through streamlining and enhancing the country
ownership of IMF-supported programs, and looks forward to reviewing
progress in this area at its next meeting. Quotas should reflect
developments in the international economy. The Committee looks forward
to further work on this issue. The Committee looks forward to the
Independent Evaluation Office (IEO) finalizing its work program and to
receiving a progress report on its activities at the next meeting.
10. The Committee expresses its heartfelt appreciation to Stanley
Fischer and Jack Boorman for their eminent records of service to the
IMF and deep commitment to the well being of all its member countries.
Both have been pivotal in shaping the role of the IMF in the
globalized economy and the evolving international financial
architecture.
11. The next meeting of the IMFC will be held in Washington, D.C. on
April 21, 2002.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)



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