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Analysis | 2001 G20 Ministerial Documents

The G20 Ottawa Ministerial Meeting:
The September 11 Terrorist Attacks Dominate G20 Agenda

Anju Aggarwal and Jason Wong
G8 Research Group
Ottawa, November17, 2001

Reversing the Economic Impacts of the September 11 Attacks

In a November 15 press release, the IMF acknowledged the impact of the terrorist attacks on economic growth by revising downwards the global growth forecast for 2001 to 2.4 per cent while maintaining the same growth rate for 2002 (a reduction of one percent). However, during the Saturday press conference the US Treasury Secretary, Paul O'Neill, challenged the IMF's short-term growth assumptions and issued a more optimistic economic outlook based on the forthcoming US fiscal growth package and aggressive interest rate easing by the Federal Reserve.

This optimism was reinforced by the Canadian Finance Minister, Paul Martin, who outlined in a speech made to the Reinventing Bretton Woods Committee and the Conference Board of Canada that strong economic and fiscal policies had positioned industrial countries to mitigate the downturn. In addition, central banks had moved rapidly to maintain liquidity and lower interest rates.

Global Action Plan to combat terrorist financing

The G20 Finance Ministers and Central Bank Governors stated in their communiqué that an Action Plan had been agreed upon to deny terrorists access to the financial system.

Paul O'Neill highlighted the need for countries to work together, "to implement United Nations resolutions to block the financing of terrorist networks, freeze terrorist assets, and criminalize the collection of funds for terrorism."

Furthermore, O'Neill urged that the IMF should immediately implement measures to monitor countries' adherence to the anti-money laundering standard developed by the Financial Action Task Force (FATF). Paul Martin added that G20 members should also provide financial assistance and training to countries lacking the resources to combat terrorist financing.

Finally, the IMF staff issued recommendations that the Fund work with the FATF to finalize an anti-money laundering report as well as expand its anti-money laundering methodology to all Financial Sector Assessment Programs and offshore financial centers.

Making the process of globalization work for all

The issue of standstills (or internationally sanctioned debt suspensions) and an international bankruptcy court gained momentum at the Summit. Paul Martin alluded to the possibility that "standstills" would play the same role internationally as Canada's Companies' Creditors Agreement Act or the US Chapter 11 legislation. IMF officials added that the IMF would be able to advance funds to countries who are in default. However, the criteria has not been finalized and no timetable for completion has been established.

The United States proposed additional measures that could aid poor countries' development financing. During the press conference, Paul O'Neill highlighted the issue of disproportionately high interest rates charged on poor country debt (calling it a "tax" on the poor). O'Neill's stressed that poor countries are being unfairly penalized by markets because of their low economic status (leading to their poor credit ratings). However, O'Neill did not provide any specific policy details.

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