NO.093

Ottawa Action Plans to Fight Financing of Terrorism; World Economy Weakens

This weekend has seen the first meeting of Ministers and Central Bank Governors

representing members of the Group of 20 (G20), IMF and World Bank since the

tragic events of September 11.

Meetings of the G20 and of the International Monetary and Financial Committee

(IMFC) and Development Committee (DC) were held in Ottawa on 16-17-18 November.

It was agreed that the attack on the United States on September 11 was an attack

on all countries intended to shake global economic confidence and security.

Members of the IMFC and the G20 recognised that the fight against terrorism

requires efforts by all countries. The IMFC called on countries to establish

by February 2001: Financial Intelligence Units (such as Australia’s Austrac);

better information sharing arrangements; and to provide increased technical

assistance so that all countries can participate in the fight to prevent the

financing of terrorism. The G20 pledged to deny terrorists the capacity to finance

terrorism through the abuse of financial systems. It agreed to an action plan

aimed at freezing terrorist assets; implementing international standards designed

to combat abuses of our financial systems, including for terrorist financing

and money laundering; and improving the exchange of information between our

financial intelligence units. In all of these areas, Australia is at the leading

edge of activity.

Ministers gave a sombre assessment of the outlook for the world economy, recognising

that the events of September 11 have exacerbated the global economic slowdown.

Japan is expected to remain in recession this year and next. The US economy

is likely already in recession and clear signs of recovery are not expected

before the latter part of 2002. Growth is forecast to be weak in Europe, leading

to a synchronised global downturn. Within our region, activity is expected to

remain very weak, with a number of regional economies dependent on an upturn

in the world economy. With this in mind, the IMFC emphasised the key role of

the developed economies in taking appropriate macroeconomic action to promote

early recovery.

Poverty in many countries is also expected to worsen in the aftermath of the

global economic slowdown and the terrorist attacks of September 11. We agreed

that it was critical that the IMF and World Bank act quickly and flexibly to

support countries facing increased difficulties. Recent events have made it

even more critical that all countries pursue sound policies to enable the benefits

of globalisation to be shared by all. Both developed and developing economies

agreed that trade opportunities would be vital to recovery and that trade is

a strong, positive force for growth and development. This again highlights the

importance to all countries of turning the Doha commitments into concrete steps

to liberalise trade and improve market access.

18 November 2001

OTTAWA