MercoPress. South Atlantic News Agency

APEC says risks have shifted to global economic activity

Finance ministers from the Asia-Pacific Economic Cooperation (APEC) grouping pledged to instrument reforms as economies in the region seek to mitigate the impact of global economic crisis.

In a joint statement following a two-day meeting in Trujillo, Peru, the finance ministers said the focus of global financial market risk "appears to have shifted from losses due to US sub-prime mortgage defaults and the associated seizure in credit markets, to the adverse impact from a more generalized slowdown in global economic activity." "While the risks to the stability of the international financial system remain elevated, the pressures in wholesale funding markets are beginning to ease," they said. "We are determined to respond to any deterioration in our economies by taking all necessary measures quickly, decisively and responsibly. We recognize the need to put in place policies that will restore financial systems and support economic activity". Prosperity within APEC economies and globally, they said, "depends on maintaining our commitment to free and open trade and investment." "An open and rules-based global trading system makes an important contribution to global growth and development. We will resist protectionist measures in all areas that could reverse the economic progress we have made over the last decade. We call for a prompt, ambitious, comprehensive and balanced conclusion to the WTO (World Trade Organization) Doha Development Agenda negotiations." Private financing of infrastructure can play an important role in developing capital markets and boosting the efficiency of financial market intermediation, they added. "Public-private partnerships are recognized as a means for meeting the infrastructure requirements of both emerging and developed APEC economies, and as a means of fostering the development of capital markets with alternative long-term financial assets." A key long-term tool for managing public expenditure is results-based budgeting (RBB), the ministers said. "RBB aims to improve the efficiency and effectiveness of public expenditure by linking the funding of general government entities to the results they deliver. We discussed our experience with RBB, recognizing the importance of focusing on outcomes as opposed to inputs and introducing performance benchmarks into budget processes." On capital market reforms, they said sound macroeconomic and taxation policies, legal and regulatory frameworks, market infrastructure, financial education, and strong transparency and disclosure standards all play critical roles. The finance ministers also emphasized participation of institutions such as pension funds, insurance firms, fund managers and securitization originators "to provide depth and innovation in markets." They also pushed for the growth of local currency-denominated bond markets. "Our ongoing objective is to realize the APEC region's economic potential by drawing together the common interests of member economies and exploring opportunities for cooperation and capacity building. It is important that the work of finance ministers continues to be aligned with the broader APEC agenda and processes," the statement read. The 15th annual meeting was also attended by representatives of the International Monetary Fund, World Bank, Asian Development Bank, Inter American Development Bank, Andean Development Corp., and the APEC Business Advisory Council. APEC leaders are scheduled to meet in Lima next November 22/23. APEC members are: Australia, Brunei, Canada, Chile, Indonesia, China, Hong Kong, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States and Vietnam.