Joint Ministerial Statement
III Western Hemisphere Finance Ministers
February 3, 2000, Cancun, Mexico
- Finance Ministers of the Western Hemisphere held their third meeting
on February 3, 2000 in Cancun, Mexico. The meeting was chaired by
Mexico’s Finance Minister, Angel Gurría (a list of participants is
attached in Annex III).
- The Committee on Hemispheric Financial Issues (CHFI) was established
in December of 1994, within the framework of the First Summit of the
Americas, as a forum where Finance Ministers of the Hemisphere could
meet and discuss relevant economic and financial issues for the
region. Since the establishment of the CHFI, Finance Ministers have
also met in New Orleans, Louisiana, in May of 1996 and in Santiago,
Chile in December of 1997.
- In the Third Western Hemisphere Meeting, Ministers reviewed the
performance of the global and regional economy during 1999 and
prospects for 2000 and beyond. They agreed that those member economies
that experienced a downturn in economic activity in 1999 are gathering
pace and that most economies in the region could expect moderate to
strong growth and declining inflation this year. The easing of global
financial tensions, lower interest rates and reduced currency
pressures, and improving commodity prices have all contributed to the
economic recovery in Latin America. Ministers reaffirmed their
commitment to strong macroeconomic and financial policies, which they
agreed are necessary to reduce volatility and ensure the sustained
growth and stability needed to raise the living standards of all their
people, and reduce poverty.
- Ministers welcomed and endorsed the Highly Indebted Poor Countries (HIPC)
initiative and its focus on poverty alleviation, and they affirmed
their commitment to participate fully in providing debt relief on
their bilateral claims on HIPC countries. They agreed that such relief
imposes exceptional burden on some less developed country creditors,
and they supported efforts underway to find a solution to this
problem. In regard to providing relief on HIPC country obligations to
multilateral, regional and subregional institutions, they emphasized
the need for equitable burden-sharing among all member countries of
these institutions, according to their payments capacity and level of
development. They highlighted the fact that the industrialized
countries -- particularly G-7 countries -- should continue to assume a
leading role on the HIPC initiative. They also called upon the IADB to
make every effort to find a solution to support its share of the HIPC
initiative, no later than by its upcoming annual meeting.
- Ministers reviewed the ongoing efforts to improve the stability of
the international financial system and discussed ways in which the
countries of the hemisphere can benefit from and contribute to these
efforts. In this respect, discussions focused on reducing countries’
vulnerability to financial crises, crisis resolution measures, and
social safety net mechanisms. They also made reference to the
particular problems of small economies.
- CHFI Ministers agreed that sound national financial policies are
central to building an international financial system less vulnerable
to crises and endorsed efforts in the region and elsewhere to
strengthen banking regulation and supervision. They stressed the
important role that sustainable and consistent exchange rate regimes
have on reducing financial vulnerability. They also recognized the
importance of sound debt management policies, which must not only
consider the level of the debt but also its maturity structure, as
well as of prudent fiscal management. They discussed the need to
address the issue of reducing vulnerability to economic and financial
disruptions within the broader framework of national balance sheet
management, including the potential role of market based mechanisms to
deal short term capital inflows. Ministers agreed upon a set of
initiatives that would help attain sound national financial policies.
These initiatives are listed in Annex I.
- Ministers also examined issues relating to crisis response,
including the appropriate role of the private sector’s involvement
in crisis resolution as well as the adoption of ex-ante measures to
reduce the likelihood and severity of crises. They examined the
efforts undertaken by governments to design and expand social
protection systems in a context of growing economic integration.
- Ministers discussed the increasing need, as their economies become
more integrated with each other and with economies around the world,
to work individually and jointly to improve governance and the
transparency of national institutions, which they agree is important
in its own right and will also help to foster greater growth and
stability. In that regard, they agreed upon a set of initiatives
intended to address money laundering, corruption and tax evasion, and
to improve corporate governance. These initiatives are listed in Annex
- Finance Ministers reviewed and welcomed the progress on the
initiatives set forth in Santiago, Chile. Those included several
measures to strengthen the stability of banking systems, including
implementation of the Basle Core Principles for Effective Banking
Supervision, improved transparency and disclosure for banks,
additional training for bank supervisors, and strengthened payments
and securities clearance and settlements systems. They also included
the commitment to establish or strengthen national units to fight
financial crime. A summary of the status of the Santiago initiatives
is presented in Annex II.
- Ministers agreed that the next ministerial meeting of the CHFI would
be held in Canada in the year 2001, at which time member countries
would report back on their progress on the new initiatives. The CHFI
will be co-chaired by Canada and Mexico.
- Finally, Ministers expressed their deepest gratitude and
appreciation to Michel Camdessus for his efforts and support towards
the region during his tenure as Managing Director of the IMF, and
wished him success in any new endeavor he may undertake.
ANNEX I: New Initiatives
- Good Governance and Transparent Institutions
- Money Laundering.
Ministers agree that money laundering, through which
criminals seek to disguise the illicit nature of their proceeds by
introducing them into the stream of legitimate commerce, facilitates the
activities of drug traffickers, arms dealers, terrorists, and corrupt
public officials. In today’s age of rapidly advancing technology and
globalization, money laundering is global in reach, and efforts to
combat it likewise require international cooperation as well as national
efforts. If unchecked, it can undermine public trust in financial
institutions and governments.
Ministers agree that additional efforts are important
to build on commitments agreed upon in Santiago and to strengthen
mechanisms to ensure their achievement. In this context they:
- Call upon all member countries to support full and effective
participation in the mutual evaluation mechanism of the OAS/CICAD to
be initiated in 2000.
- Call upon all member countries to support and participate in
financial action task forces, in either the Caribbean Financial
Action Task Force (CFATF) or the new Financial Action Task Force for
South America, whose creation Argentina and Brazil have pledged to
- Call upon the IMF, working together with the other IFIs:
- To update previous studies on the magnitude of money laundering
and its macroeconomic impacts, and analyze in particular the effects
of money laundering flows on the economies of the Hemisphere,
employing case studies as appropriate, and
- To explore mechanisms that could be pursued by the IMF and other
IFIs to encourage and support countries in their fight to eradicate
Ministers agree that corruption has been recognized
as a serious problem that adversely affects investment, public revenues,
growth and development in much of the Western Hemisphere, and note that
the OAS has identified corruption as a threat to investor and taxpayer
- Call upon IFIs to provide assistance as appropriate and upon request
to help ministries of finance and economics to identify and combat
problems of corruption in areas of customs, tax, budget, procurement
and financial regulatory administration, and
- Call upon all member governments to ratify and implement the OAS
Anti-Corruption Convention and to support establishment of a follow-up
OAS mechanism for multilateral and mutual review and evaluation of
progress towards effective prevention and punishment of corruption.
- International Tax evasion
Tax evasion may jeopardize the integrity and
stability of financial systems, adversely affect revenue collection, and
compromise the fairness and integrity of domestic tax systems.
Ultimately, countries’ ability to pursue sound fiscal management may
Ministers call upon the IADB, the World Bank, the IMF
and member countries to provide technical assistance and other support
- Jurisdictions interested in undertaking reforms to reduce the
potentially harmful aspects of their financial regimes and whose
financial services sector may be adversely impacted by such reforms,
- Other countries in the region in their efforts to combat tax
- The promotion of international cooperation in this issue.
- Corporate Governance.
Recent episodes of crises uncovered the weaknesses of
the legal, institutional and regulatory frameworks that govern firms’
activities. These weaknesses adversely affect the relationships between
the different participants of the governing system: a company’s
management, its board, its shareholders and other stakeholders. Thus,
good corporate governance should provide firms’ management and board
with the appropriate incentives to pursue the objectives that are of
interest to the company and its shareholders, encouraging firms to use
resources in a more effective manner. This should stimulate investment,
both domestic and cross-border, and should foster more efficient and
transparent operation of firms in the economy.
In this respect, Ministers agree to:
- Establish a working group, chaired by Mexico, to assess corporate
governance practices in selected CHFI economies taking into account
work already underway in international fora and the private sector,
against the standards set forth in the OECD principles of corporate
- Develop recommendations before the next CHFI ministerial on measures
that could be taken to strengthen practices throughout the region.
- Financial Policies to Achieve Higher and Sustainable Growth
- FSAP and Standards.
Ministers welcome the work carried out jointly by the
IMF and the World Bank during the current, pilot phase of the Financial
Sector Assessment Program (FSAP), a Program whose purpose is to assess
the soundness and, when applicable, developmental needs of national
Ministers support the mainstreaming of the FSAP by
the IMF and the World Bank once the current pilot phase is evaluated in
the second quarter of the year. After noting that this pilot phase
includes assessments of Colombia, Canada and El Salvador, they
encouraged the participation of other Western Hemisphere countries in
the new phase of the Program.
Ministers further endorse the recent and ongoing work
on codes and standards -- covering, inter alia, financial
supervision, policy transparency, and data dissemination -- carried out
by the various competent standard-setting bodies, including the IMF and
the Basle Committee on Bank Supervision. Ministers support and agree to
participate in the IMF experimental Reports on the Observance of
Standards and Codes ("transparency reports").
- Debt and Fiscal Management.
Ministers agree that sound debt and fiscal management
are increasingly important in a more integrated world to reduce
countries’ exposure to refinancing risk and improve their ability to
manage efficiently cyclical fluctuations in revenue. Sound debt and
fiscal management contribute critically to reducing countries’
vulnerability to financial crises, to making countries more resilient in
the face of various shocks and, ultimately, to achieve long-run
stability and growth.
In this context, Ministers call on interested
countries, under Canada’s leadership, to prepare discussion papers on
their debt management and on their fiscal management, and ask the IADB,
the IMF and the World Bank to host a seminar to discuss these papers.
The papers would include the following:
(1) Debt management:
- current debt management practices, in the context of the debt
management "best practices" currently being developed by the
IMF and the World Bank,
- profile of outstanding debt structure,
- establishment of adequate communications with the market.
(2) Fiscal management:
- current practices for setting and achieving fiscal targets,
- current practices for responding to cyclical fluctuations in
The debt and fiscal management initiatives will build
on the work being carried out in other international fora and focus on
implementation within the hemisphere.
(3) Harmonization of fiscal and debt statistics.
ANNEX II: Santiago Initiatives
- Strengthening and Promoting Financial Stability.
- Basle Core Principles. Ministers note the ongoing work performed
by the Association of Supervisors of Banks of the Americas (ASBA) in
reviewing countries’ implementation of the Basle Core Principles for
Effective Banking Supervision. They welcome the ASBA’s plans to
conclude its Santiago work program with a review of Basle Principles
implementation by 15 countries in the Western Hemisphere, which will be
finalized by not later than December 2000. In that regard, they welcome
and endorse the financial support to be provided by the
IADB/Multilateral Investment Fund (MIF) and by member countries being
reviewed. They further agree that this ongoing work by the ASBA should
be complementary to the financial sector assessment initiative described
in Annex I.
- Transparency and Disclosure. Ministers reaffirm the importance
of improving transparency and disclosure practices of banks in the
hemisphere and appreciate the working group’s efforts to evaluate the
reporting and disclosure requirements of five countries (Argentina,
Brazil, Chile, Mexico, Venezuela). Ministers recognize Chile’s
leadership in this area and agree that the working group will continue
its work, under the leadership of Chile, with assessments of bank
transparency and disclosure in additional countries of the region.
Ministers encourage countries undergoing these evaluations to share
their experiences with other member countries and to develop concrete
plans to address identified weaknesses. Further support of IFI’s is
- Strengthening Financial Markets.
- Bank Supervisor Training. Ministers thank member governments and
ASBA for their efforts to develop an effective curriculum and
infrastructure for bank supervisor training. Two formal training
programs are currently underway, one for 18 Spanish-speaking countries,
under which a number of supervisors and instructors have already been
trained, and one for 12 Caribbean countries, for which IADB funding is
available. Ministers encourage member governments, in conjunction with
ASBA and others, to continue their training efforts.
- Payments and Securities Clearance and Settlement Systems.
Ministers reaffirm the importance of transparent, efficient, and secure
clearance and settlement systems. Ministers recognize the World Bank and
member governments for their productive work on this initiative,
including the formation of an advisory council consisting of
representatives of several central banks and bank supervisory
institutions, the development of greater communication among securities
regulators and central banks, and work on country assessments of Peru,
Argentina, and Chile. Ministers agree that a sustainable effort is
warranted in this area which would: (1) promote and assist with the
mobilization of resources for continued work on improving clearance and
settlement systems in the hemisphere, and (2) evaluate the usefulness of
establishing a regionally-based mechanism to advance implementation of
relevant standards set by international standard-setting bodies such as
the Committee on Payments and Settlement Systems.
- Combating Financial Crimes. Ministers welcome the progress since
Santiago on the establishment and strengthening of special country-level
units to combat financial crimes, including money laundering, and on the
timely sharing of information on financial crimes. They note that eight
new units have been formally recognized since the last ministerial and
seven more are nearing completion in the hemisphere, which will bring
the total number of units in the hemisphere to 20. Ministers reaffirm
their commitment to encourage the establishment of such units where they
do not now exist and to continue to expand national and international
coordination to fight financial crimes and money laundering.
- Establishment of an FTAA Financial Services Negotiating Group.
Ministers note that discussions on trade in financial services have been
progressing as part of negotiations on services and investment under the
Free Trade Area of the Americas (FTAA) process. Ministers reaffirm the
importance of dealing with financial services in a separate negotiating
group within the FTAA, which could be established at an appropriate time
in the near future. It will work within the context of a single
- Credit for Microentrepreneurs and Small Businesses. Ministers
welcome the progress made under their Santiago initiative to expand
access to credit and broaden economic opportunity to microentrepreneurs
and small businesses in the hemisphere. Ministers thank the IADB for its
leadership role in this area, including: (1) the $1.4 billion investment
during 1998-1999 by the IADB and MIF in microfinance and small business
credit as well as other programs to facilitate the expansion of such
credit, (2) laying the groundwork for the upcoming meeting, co-hosted by
the IADB and MIF, which will address concerns of the region’s
superintendents with respect to regulation and supervision of
microfinance and will set up an advisory council for the establishment
of sound microfinance lending guidelines. Ministers encourage member
governments, the IADB, and other regional and subregional groups to
continue their efforts to expand the availability of credit to
microentrepreneurs and small businesses.
ANNEX III: List of Participants
Trinidad and Tobago
Managing Director of the IMF
President of the IADB
President of the World Bank
General Secretary of the OAS