The Finance Ministers of seven major industrialized countries met today to conduct the first exercixe of multilateral surveillance pursuant to the Tokyo Economic Declaration of their Heads of State or Government of May 6, 1986. The Managing Director of the International Monetary Fund also participated in this meeting. The Ministers reviewed recent economic developments and their economic objectives and forecasts collectively, using a range of economic indicators, with particular view to examining their mutual compatibility and to considering the need for remedial measures. The Ministers noted that progress had been made in promoting steady, non- inflationary growth in their countries.
Inflation is likely to remain low.
Interest rates have fallen with particular beneficial effects for indebted developing countries. However, the Ministers noted that the present scale of some current account imbalances cannot he sustained The exchange rare changes since last year are making an important contribution towards redressing these imbalances, and their full effects will increasingly come through in the period ahead. The Ministers agreed that cooperative efforts need to be intensified in order to reduce the imbalances in the context of an open, growing world economy. Countries with major deficits must follow policies which will foster significant reductions in their external deficits and they committed themselves, among other things, to make further progress in reducing their budget deficits in order to free resources to the external sector. These actions should help stabilize exchange rates, and all are necessary so that imbalances can be reduced sufficiently without further significant exchange rate adjustment.