Meeting of Commonwealth Finance Ministers, Port of Spain, 19–210 September 1990

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Meeting of Commonwealth FinanceMinisters, Port of Spain, 19–210September 1990Published online: 15 Apr 2008.

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The Round Table (1991), 317 (099-107)

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MEETING OFCOMMONWEALTH

FINANCE MINISTERS,PORT OF SPAIN,

19-20 SEPTEMBER 1990COMMUNIQUE

COMMONWEALTH FINANCE MINISTERS met in Port of Spain,Trinidad and Tobago, on 19-20 September under the Chairmanship of the

Hon Selby Wilson, Minister of Finance, Trinidad and Tobago. The openingaddress was given by the Rt Hon Arthur Robinson, Prime Minister of Trinidadand Tobago. The following paragraphs record the main conclusions of theirdiscussions.

World economic situation

2 Ministers noted that in both industrial and developing countries the pace ofeconomic activity generally had slowed down in the past year. In the industrialcountries, after eight years of growth, a slowdown in countries that had beenexperiencing over-rapid growth in domestic demand was necessary, while inother industrial countries growth remained strong; however, inflationarypressures and trade imbalances conttinued to threaten the sustainability ofeconomic growth in some industrial countries; and high interest rates, lowcommodity prices, serious debt service burdens and barriers to exportsremained obstacles to growth in many developing countries. Ministersexpressed serious concern that the prospects for the world economy were nowthreatened by events in the Gulf and the sharp rise in world oil prices.3 Ministers recognized that the fight against inflation should continue to haveprimacy; and that efforts must be made to boost savings in deficit industrialcountries to lessen pressure on interest rates. They called for continued policycoordination among industrial countries with a view to promoting greaterstability of exchange rates and adjustment in trade imbalances. Theyencouraged the IMF to play its due role in that process.4 Ministers noted that for some years many developing countries had been

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undertaking adjustment programmes. Some had made perceptible progress.Many had faced difficulties. Ministers expressed concern at the recent furtherdeterioration in the external economic environment, setting back the prospectsfor the resumption of growth. They expressed concern that the adjustmenteffort may falter in the face of a worsening world economic situation.5 Ministers expressed particular concern at the economic implications of theGulf crisis. While the oil price increases would be beneficial for some, ifsustained they would slow growth or reduce income in most countries.Meanwhile, some countries were seriously affected not only by mounting oilbills but also by loss of workers' remittances, lost exports, and the costs ofsupporting the United Nations embargo against Iraq. They feared that in manycases structural adjustment programmes would be put at risk.6 Ministers believed that timely action was needed to avert these threats togrowth and development. While recognizing that the only way forward was toadjust, they urged donors to recognize that special efforts were needed to assistdeveloping countries, many of which were already under severe balance ofpayments pressure. They called for urgent action to ensure that adequateresources were available, with an appropriate modification of terms andconditions for the needs of the countries particularly affected by the Gulf crisis,perhaps through an amendment of the CCFF or an alternative facility to offsetthe impact of the crisis. They also called on all countries to give renewedattention to energy saving measures in the short and medium term.7 Ministers noted the especially difficult economic circumstances in thecurrent situation of the least developed and low-income countries and called forrenewed efforts to assist them. They noted the conclusions of the Second UNConference on Least Developed Countries, held in Paris in September, andwelcomed the strengthened aid commitments that resulted from it.

World of change

8 Ministers considered the interim Report of the Chairman of the Common-wealth Expert Group on Global Economic and Political Change and ItsImplications for the Development Process. They noted that profound changeswere under way in the world economy and polity. They recognized, in par-ticular, the reduction in East-West tensions; the growth of new technologies;the regionalization of trade against a background of globalization in pro-duction; decline in world saving coupled with increased mobility of capitalacross national boundaries; the decline of the command-economy model andincreased acceptance of the role of market-mechanisms and forces; andincreased appreciation of the link between pluralistic political structures anddevelopment.9 Ministers agreed that the changes under way provided both opportunities aswell as challenges to development and that developing countries should be givennecessary assistance in their efforts to take advantage of the opportunities. Theylooked forward to considering the final Report of the Expert Group at their nextmeeting and asked the Group to finalize its work in time for its conclusions tobe taken into account at the Western Economic Summit in June 1991.10 Ministers asked the Secretary-General to hold consultations on the

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proposal that Commonwealth Ministers bring together a representative groupof Heads of Commonwealth and non-Commonwealth governments to considerthese issues. Depending on the outcome, they agreed to give the matter serious

. attention again when they considered the final report.

Eastern Europe

11 Ministers welcomed the economic and political reforms taking place inEastern Europe and the USSR. They believed that the changes under waypromoted world peace and security; and would also provide a stimulus to worldtrade and contribute to prosperity. At the same time, they emphasized the needfor special efforts to ensure that increased flows to Eastern Europe would notadversely affect developing countries which often faced more dauntingproblems; and that these countries should share in the peace dividend that couldaccrue in the longer term.

Natural disasters

12 Ministers expressed concern at the economic vulnerability, particularly ofpoorer and small states, to natural disasters. In this context, they noted the pre-liminary work done by the Secretariat at their request last year on the economicconsequences and possible measures of mitigation. They asked it to completethe work in time to allow full consideration of the Report at their next meeting.

Trade

13 Ministers expressed concern that much work remained to be done beforethe Uruguay Round could be brought to a successful conclusion. They wereespecially concerned that the positions of the principal protagonists on the moredifficult issues, both old and new, still seemed far apart. They regarded as vitalfor the success of the negotiations, agreements to make major progress inliberalizing trade in agriculture, to bring trade in textiles and clothing quicklyback under GATT principles and rules, and on the non-discriminatory applica-tion of safeguard measures. They recognized the need also for agreements onthe new issues in accordance with the negotiating mandates of the Punta del EsteDeclaration and Mid-Term Review decisions.14 Ministers strongly emphasized the importance of ensuring that theUruguay Round was successful; and beneficial to both developed and develop-ing countries. They reiterated their governments' commitment to work towardsthose goals.

Financial flows to developing countries

15 Ministers noted with concern that net resource flows to developingcountries had declined in 1989, net transfers continued to be negative and netdisbursements of official development assistance (ODA) from the DAC Groupof Countries had stagnated. They recognized that at this time there was aparticular need for enhanced ODA flows to reinvigorate development.

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Ministers therefore called on industrial countries whose aid performance fellshort of the agreed UN aid target of 0.7 per cent of GNP to make renewedefforts to achieve it. They commended the practice of those industrial countrieswhich generally provided or were increasingly providing ODA in the form ofgrants, and urged others to do the same.16 Ministers called for agreement on renewing the Special Programme ofAssistance for Africa at a substantial and increased level, which they believedmade a significant contribution in meeting the resource needs of sub-SaharanAfrica. Ministers also drew attention to the concept of a global coalition forAfrica articulated at the Maastricht Conference.17 Ministers welcomed the increased levels of private investment flows inrecent years. They noted that the scope for flows could be enlarged by thedeveloping countries' continuing efforts to improve their business environmentand competitiveness; by the host countries removing any remaining impedi-ments to such flows; and by reducing obstacles to developing countries' exports.

External debt

18 Ministers welcomed the debt relief measures effected in the recent past, andnoted that the benefits of these measures were becoming apparent, in someinstances through a return of investor confidence and improved viability. Theybelieved, however, that overall the debt problem remained acute; that for anumber of countries the present arrangements for debt relief were inadequate tosupport a return to viability; and that additional action was therefore required—including a review of eligibility for relief.19 Ministers welcomed the debt and debt service reduction packages agreedwith commercial banks under the Brady initiative. They noted, however, thatthe progress in its implementation was slow. They asked the Fund and Bank tokeep under review the conditions under which that initiative was being imple-mented and the adequacy of the funds available to support such packages.20 Ministers welcomed the significant amount of relief provided to theseverely indebted low-income countries on their bilateral official debt. Theyexpressed concern, however, that despite the measures adopted, including theapplication of the Toronto terms to the bilateral official debt of a number ofcountries since 1988, the cash-flow improvements remained modest; and thestock of debt of these countries continued to grow.21 In this connection, Ministers warmly welcomed the proposals made byBritain to provide further measures of debt relief for debt-distressed low-income countries following appropriate adjustment programmes, by reschedul-ing the whole stock of eligible Paris Club debt at one go; doubling the debt reliefgiven, so that two-thirds of eligible debt would be written off; providingadditional cash flow relief by capitalizing interest during the first five years; andextending repayment periods to 25 years. They commended these proposals,which they named the Trinidad and Tobago terms, to the Paris Club for earlyadoption.22 Ministers welcomed the growing recognition of the problem of official debtof lower middle-income countries. They welcomed recent steps taken in theParis Club to lengthen repayment periods and to introduce the option of

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debt/equity swaps. They noted that for some countries capitalization ofinterest at market rates had added to debt burdens. They urged the Paris Clubto give serious consideration to additional options to address the debt problemof lower middle income countries.

IMF issues

23 Ministers noted that several developing countries continue to needsubstantial balance of payments assistance, and in this context welcomed theincrease in disbursements by the Fund in the past year. They also welcomed theagreement to increase IMF quotas by 50 per cent, and emphasized the impor-tance of taking the necessary legislative action to bring it into early effect. Theycalled on the Fund to ensure adequate access; respond swiftly and flexibly to theneeds of member countries in the current situation; and keep under review thequestion of a fresh allocation of SDRs.24 Ministers acknowledged the value of the new 'rights approach' adopted bythe Fund, and called on countries in arrears, the Fund management and theinternational donor community to take it forward cooperatively with adequatecommitment and support.25 Ministers emphasized the importance of ensuring that adjustment pro-grammes were flexible, contingency orientated and adequately funded. Theyalso emphasized the importance of putting in place adequate mechanisms toprotect the poor and the vulnerable as part of the programmes. They called onthe Fund to pay increased attention to these issues. In this context they invitedthe Secretariat to prepare a report on what improvements could be made tomitigate the social costs of structural adjustment programmes.

World Bank issues

26 Ministers recognized the vital role of IDA in the provision of concessionalresources to low-income developing countries, and welcomed the agreementreached on its eighth replenishment. They noted the increased importanceattached to performance in the allocation of its resources and, while welcomingit, emphasized that access to IDA assistance should remain predictable.27 Ministers believed that the Bank had an important role to play in counter-ing the growing incidence of poverty in developing countries. While recognizingthat a number of countries had had in place programmes for poverty alleviationand reduction for some time, they welcomed the intention of the Bank manage-ment to attach increased weight to poverty reduction in the allocation of itsresources. They emphasized, however, the importance of taking adequateaccount of the differences in social and economic conditions between countriesin the design of programmes and performance criteria; of the need for trans-parency in the procedures adopted; and of the need to adopt a medium-termtimeframe in judging results. They stressed the importance of evolving anadequate analytical framework for improving macro-economic policies forreducing poverty.28 Ministers welcomed the World Bank Group's private sector action pro-gramme in support of the promotion of an enabling business environment,

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public sector restructuring including privatization and financial sector develop-ment and reform. They reiterated the importance they attached to the role of theprivate sector in contributing to development, including the role it could play inpromoting competitiveness and in attracting private flows of capital. In theapproaches it adopted, however, the Bank Group should pay due attention tothe differences in the socio-economic conditions among countries, and ensurethat its approaches were consistent with national objectives, and the develop-ment of indigenous enterprise. Ministers also emphasized the importance ofcareful preparatory work for privatization to make progress and contributeearly to efficiency improvement.29 Ministers noted the important contribution being made by the Inter-national Finance Corporation (IFC) in promoting private flows of capital andin the development of the private sector, as part of the World Bank Group.Ministers supported an expanded role for the IFC in these areas; its work insmall states; and called for an early agreement on a large increase in its capital.

Women and development

30 Ministers welcomed the growing recognition of the role of women indevelopment and emphasized the importance of putting in place concrete pro-grammes that enable women to play a fuller economic role. They believed thatprogrammes aimed at improving the productivity and income of women willcontribute not only to a reduction in poverty, but also to development,profoundly and positively. They noted the follow-up action taken by the Secre-tariat to the Expert Group Report, Engendering Adjustment for the 1990s, andthat the subject of women and structural adjustment would be discussed by themeeting of Commonwealth Ministers responsible for Women's Affairs inOttawa in October; and asked the Secretariat to keep the subject undercontinuous review.

World summit for children

31 Ministers welcomed the important and timely world summit for children tobe held on 29-30 September which would focus international attention on theirsurvival, protection and economic advancement. They acknowledged the meritof increased international attention to this vital issue and urged governments,multilateral lending institutions, and international agencies to take concretesteps to accelerate progress in the design and implementation of programmes ofdevelopment assistance affecting children.

Protecting the environment

32 Ministers emphasized that the protection of the environment was a globalproblem requiring global solutions; and that the industrial countries had aspecial responsibility to help meet the costs of environmental protection.Ministers noted that environmental damage was often a product of under-development and, in turn, a contributor to poverty; and that sufficient flows offinance were needed to enable developing countries to address these inter-linked

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problems. Ministers recognized that small states were particularly vulnerable toman-made environmental disasters, such as oil spillages, and saw a need to putin place mechanisms for alleviating their burdens.33 Ministers welcomed the agreement in London in June to strengthen the1987 Montreal Protocol and to establish an Interim Multilateral Fund to helpdeveloping countries adopt ozone protecting technologies. They called for itsratification by all countries and early implementation of the agreed programme,including the establishment and funding of the Fund.34 Ministers also welcomed the Report of the Commonwealth Group ofExperts on a Programme for Sustainable Forestry in Guyana and called on theinternational community to assist in its implementation.3 5 Ministers welcomed the increased integration of environmental concerns inthe World Bank's operations. They emphasized, however, that careful technicalwork was needed to establish the links between particular economic decisionsand the impact on the environment; and that the process of integrating environ-mental concerns into operations should not obscure the process of project orprogramme approvals and monitoring.36 Ministers expressed concern at the possibility of an asymmetry developingin regard to environmental action between the developing and industrialcountries. They noted that industrial countries, as well as developing countries,should make every effort to place environmental concerns at the centre ofeconomic decision making and that the integration of environmental concernsinto aid should not imply that one set of countries were pressed to take moreaction than others.37 Ministers strongly endorsed consideration of the early establishment of theproposed Global Environmental Facility to help developing countries to protectthe global environment; but emphasized the need for developing criteria fordistinguishing the activities which the new Facility would support from existingBank programmes.38 Ministers also noted the importance of improved access and adoption ofenvironmentally benign technology in arresting the degradation of the environ-ment; and called for consideration of mechanisms for the transfer of suchtechnology to developing countries on concessional terms.39 Ministers emphasized that a common appreciation of the need to protectthe environment was not enough; that it needed to be followed by a commitmentto take politically difficult, and economically demanding, decisions in allcountries. They expressed the hope that such a commitment would evolve in theprocess preparatory to the 1992 UN Conference on Environment and Develop-ment.

Commonwealth Equity Fund

40 Ministers were pleased to note that the Commonwealth Equity Fund hadbeen launched with capital of $56.6 million. They congratulated the Secretariaton its catalytic role in getting the Fund established. They were pleased to notethat the IFC was an investor and was playing a role as placing agent. Theylooked forward to the Fund's successful operation and future expansion. In thisconnection, prospective host countries which have not yet concluded an

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agreement with it agreed to make decisions as early as possible on the provisionof preferential access conditions. Ministers expressed the wish that the Fundshould be enabled to invest in as wide a spread as possible of Commonwealthdeveloping countries.

Commonwealth functional cooperation

41 Ministers expressed appreciation for the range of functional cooperationactivities undertaken by the Secretariat, and the Commonwealth Fund forTechnical Cooperation (CFTC). They noted in particular the valuable con-tribution made in assisting developing country members in policy formulationin the context of adjustment, access to capital markets and finance fordevelopment; the protection of tropical forestry and the environment; andparticipation in the Uruguay Round of Multilateral Trade Negotiations; and inthe management and restructuring of debt.42 Ministers expressed appreciation for the Report of the Secretary-Generalon the activities of the CFTC in 1989-90; and satisfaction at the continuedimprovement in the Fund's financial stability and resources. They alsoexpressed satisfaction at its increased capacity to assist member governments inobtaining advisory services on macro-economic policies and financial manage-ment, as well as technical support in the mobilization of resources to facilitateprivate investment and the development and expansion of exports.43 Ministers reaffirmed the value they attached to Commonwealth technicalassistance and functional cooperation activities. They believed that at a timewhen the global economic environment was undergoing profound changes,there was value in the Commonwealth playing an enlarged role in providingpolicy advice, and technical assistance at the request of member states, withcontinuing priority attention given to the needs of the small member states,which were more vulnerable to external changes. They agreed to continue toincrease their support for the Secretariat, and for the CFTC, in order to enableit to maintain an effective response to member countries' requests forassistance.

Commonwealth Finance Ministers meetings

44 Ministers noted that it was some time since the arrangements for theirmeetings had been reviewed. In the light of the significant changes in the worldeconomy and in the nature and character of their respective economic concerns,and in the context of the on-going High-Level Appraisal of the Commonwealthinitiated by their Heads of Government, they asked the Secretariat to prepare astudy, in consultation with governments, on possible changes to enhance thevalue of their meetings. This study would examine such issues as the agenda,content, timing and venue of the annual Commonwealth Finance MinistersMeetings, including arrangements for carrying forward its conclusions. Thisstudy would be reviewed at their next meeting.

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Appreciation

45 Ministers expressed their appreciation to the Government and people ofTrinidad and Tobago for their warm hospitality and for the excellent arrange-ments made for the meeting. They accepted the invitation of the Minister ofFinance, Malaysia, to meet in his country next year.

John Vincent(28 February 1943-2 November 1990)

The death of John Vincent, Montague Burton Professor of InternationalRelations at the LSE and a member of the Moot for just over a year, means thepassing of a relatively young scholar of considerable achievements and richpromise. For all that he had done, there was none the less a strong impressionamong his friends of much potential to be developed and realized.

As someone who had studied and/or taught at the Universities of Wales,Leicester, Oxford and London, as well as the ANU and Princeton, and had beeneditor of the BISA journal International Studies, John had a remarkably wideand up-to-date knowledge of current scholarship in international relations inthe English-speaking world. This combined with an acute—but unabashedlyirreverent—historical sense for tradition and the pedigree of ideas, as wasevident in his own writing, especially in his books on non-intervention and onhuman rights.

John was a family man, devoted to his wife and sons and ever ready to exchangeteristically forthright, frank and good humoured contributions were soonrecognized and valued by all his colleagues.

The packed University Church of St Mary the Virgin in Oxford for his funeralservice on 9 November was a tribute to the breadth and depth of his friendshipsand a last public reminder of John's remarkable capacity to kindle and keepwarm these friendships across differences of race, nation, gender or generation.

John was a family man, devoted to his wife and sons and ever ready toexchange family gossip with his friends. He was an enthusiast for causes hebelieved worthwhile, but never in any vain way. He disliked pomposity and cantand could puncture both with gentle humour and his ready smile.

Just a week or so before his death he was encouraging this obituarist to dosomething—with John's own help and backing—to revive the British Com-mittee on International Theory. Characteristically, he was bubbling with ideasfor future articles and activities for The Round Table. We mourn his passing butare grateful that some of his time was in our company.

PL

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