"America can and must continue to act and to lead to take the urgent
steps needed today to calm the financial crisis, restart the engine of growth
in Asia and minimize the impact of financial turmoil on other nations and
to make certain that for tomorrow the institutions and rules of international
finance and international trade are prepared to support steady and sustainable
growth over the long term."
Council on Foreign Relations, New York
September 14, 1998
The global imperative for the Clinton Administration has been to build a global
financial system in which capital account crises of the scale of the Asian financial
crisis will not reoccur. There are three core components to building such a
system: Enhancing the capacity of emerging market economies to absorb capital
safely; reducing countries' vulnerability to sudden turnarounds in confidence,
whatever their origin; and developing the most effective international tools
for responding to these new kinds of crisis.
A RECORD OF ACCOMPLISHMENT
Promoted reform in the International Monetary Fund (IMF), with Congress
and the support of the rest of the G-7, in order to bring transparency, accountability
and more strict conditions for IMF loans to struggling economies.
Substantially modernized IMF's lending policies to reflect growing role
of private capital markets, by focusing IMF lending more on short-term balance
of payments needs.
Led the G-7 to adopt initiatives to strengthen the international financial
architecture by creating stronger institutions, to strengthen the IMF and
the World Bank, to include emerging countries in global dialogues on financial
markets, to enhance transparency in governments and financial institutions,
to create stronger regulation in lending countries, to equip emerging markets
to deal better with risk and to share responsibility for crisis resolution.
Agreed, along with the G-7, to develop a precautionary line of credit and
an emergency facility at the World Bank in order to strengthen arrangements
for dealing with future economic crisis contagion.
At the G-7 summit in Cologne in June 1999, endorsed the Heavily Indebted
Poor Countries (HIPC) Initiative, which is designed to provide deeper multilateral
debt reduction for poor countries with unsustainable debt burdens. This initiative
would provide a 70 percent debt reduction for the designated countries.
Submitted an amended budget to Congress in September 1999 requesting appropriations
of $1 billion for the next four years in order to fund our contributions to
the HIPC Initiative.
Led the initiative to bring about change in the IMF through creating mechanisms
to improve borrower incentives, increase IMF transparency and accountability
through wider publication of IMF documents and prevent the burden of adjustment
from falling heavily on the poor.
Pushed for and won approval by Congress of the IMF quota, which provided
$90 billion in new resources for the organization to combat the financial
Led an international effort to combat corruption, culminating in an effort
to conclude and ratify the Organization for Economic Cooperation and Development
(OECD) Anti-Bribery Convention, to complete a WTO agreement on transparency
in government procurement, and in the release of a comprehensive National
Money Laundering Strategy.
Pushed for reform of the IMF and the creation of the Contingent Credit
Line, to encourage safer debt management practices and reduce the risk of
contagion to countries with strong policies and institutions.
Encouraged expansion of the Special Data Dissemination Standard (SDDS),
a standard by which countries accessing capital markets are to improve their
information collection and publication practices. Pushed for greater participation
and compliance with SDDS standards among emerging market economies.
Agreed to participate in the New Arrangements to Borrow.
Mexican Peso Crisis
Took bold, decisive action by providing financial stabilization assistance
to Mexico in the wake of the peso crisis of late 1994. This courageous initiative
stabilized the Mexican economy and helped preserve the 700,000 U.S. jobs dependent
on U.S. exports to Mexico.
Restored financial stability to Mexico and contained the threat to other
emerging markets in the world through a $12.5 billion loan that halted Mexico's
crippling liquidity crisis
Allowed Mexico to prepay $7 billion owed to the United States under its
emergency support package. In January 1997, Mexico announced the full repayment
of all funds borrowed from the United States. By 1996 the U.S. Treasury had
already earned more than $1.2 billion in interest on this loan program, which
was $460 million above our borrowing costs. Mexico also repaid $1.5 billion
on its International Monetary Fund obligations.
Asian Financial Crisis
Supported IMF-financed stabilization programs for the countries of Asia
affected by the crisis. These programs, which complement and reinforce our
trade policy goals, included measures to strengthen financial sectors, rationalize
business-government linkages, improve transparency, open markets to foreign
investment and reduce trade barriers.
Continued efforts to open markets in the region, to secure new trade agreements
and enforce old agreements in order to encourage economic growth and stability.
Urged International Economic Institutions such as the IMF, the World Bank
and the Asian Development Bank to explore plans to relieve individual firms
of massive debt and to establish a social safety net for Asian families hurt
by the crisis.
Pledged to increase the commitments of our Export-Import Bank to specific
economic development projects at the end of 1998 in order to benefit citizens
of countries affected by the crisis and to increase our exports to those countries.
Supplemented the IMF's efforts to monitor compliance to IMF trade-related
commitments in applicable markets.
Brazilian Financial Crisis
Contributed $5 billion in late 1998 to an international financial package
designed to stabilize and revitalize the Brazilian economy after their brief
financial crisis. Brazil to date has already started to repay $3.2 billion
of the funds given by the United States.
TIMELINE OF ACCOMPLISHMENT
September 14, 2000
IMF Executive Board votes to cut duration of its loan programs
and introduces premium pricing for habitual borrowers to encourage countries
to rely more on private markets.
June 4-5, 2000
President Clinton visits Moscow to meet with newly elected Russian
President Putin and encourages Russia to move ahead with a strong
economic reform program.
February 7, 2000
President Clinton issues his FY 2001 budget request, including
a $600 million contribution to the HIPC trust fund.
January 29, 2000
President Clinton addresses the World Economic Forum in Davos,
Switzerland regarding international finance and debt relief.
December 15, 1999
First meeting of G-20 Finance Ministers in Berlin. New group
annually so views of key emerging market countries can be heard.
September 29, 1999
President Clinton addresses the World Bank and International
Fund annual meeting and emphasizes the importance of debt relief and a
strong international financial architecture.
June 18, 1999
President Clinton and the other G-7 Leaders at the Cologne Summit
agree on steps to strengthen the international financial architecture and
called for faster, broader and deeper debt reduction.
June 16, 1999
President Clinton pledges to find the resources to contribute
to the HIPC
March 16, 1999
President Clinton proposes the HIPC Initiative, in order
to "ensure that no country committed to fundamental reform is left
with a debt burden that keeps it from meeting its people's basic human needs
and spurring growth."
October 6, 1998
President Clinton speaks to the IMF and the World Bank to
encourage strong action by both organizations to stave off the growing financial
crisis and to encourage the Congress to fulfill its financial obligations
to the IMF.
September 14, 1998
In a speech to the Council on Foreign Relations, President
Clinton sets goals to expand efforts to enable viable businesses in Asia,
to ask the World Bank to expand its support for a social safety net in Asia,
to urge the use of $15 billion in emergency IMF funds to prevent the contagion
of the financial crisis, and to make Congress meet our obligations to the
IMF. The speech serves to temporarily calm unpredictable international markets.
President Clinton visits Moscow and stresses the importance
of Russia's economic recovery to the United States and to the world.
Fact Sheet: "Emergency Support Program for Mexico Concludes Successfully
and Ahead of Schedule," January 15, 1997.
"Emerging from Crisis: the Beginnings of a New Asia," Deputy
Treasury Secretary Summers, February 11, 1998.
Testimony of Ambassador Charlene Barshefsky, USTR before the House Ways
& Means Trade Subcommittee, February 24, 1998.
Remarks by the President to the Council on Foreign Relations, September
Remarks by the President to Opening Ceremony of the 1998 International
Monetary Fund/World Bank Annual Meeting, October 6, 1998.
Press Briefing by Secretary Rubin, National Economic Advisor Sperling and
Deputy Treasury Secretary Summers, October 30, 1998.
Treasury Secretary Rubin Remarks on "Reform of the International Financial
Architecture" to the School of Advance International Studies, April 21,
Treasury Secretary Rubin Statement to the IMF Interim Committee, April
Fact Sheet on the Cologne Debt Initiative, June 18, 1999.
Fact Sheet: "Strengthening the International Financial Architecture,"
June 18, 1999.
Priorities for a 21st Century Global Financial System, Treasury Secretary
Summers, Remarks at Yale University, September 22, 1999.
Fact Sheet: Statement by Treasury Secretary Lawrence Summers, September
Fact Sheet: "Strengthening the International Financial Architecture",
Treasury Department, July 8, 2000.