Statement by Treasury Secretary Paul H. O'Neill at the Pre-G-7 Press Conference

Good morning. Tonight I will depart for a meeting of G-7 Finance Ministers in Rome. I look forward to meeting my new Italian colleague, Giulo Tremonti, who is hosting our meeting in the run-up to the upcoming Economic Summit later this month in Genoa. And I welcome this opportunity to exchange views once again with my colleagues.

Developments in the world economy, which is experiencing a period of slow growth, will be a key focus of our discussions. I am confident that the U.S. economy will move to a higher growth rate later this year. Our markets continue to be flexible and dynamic, and we expect tax cuts, including $40 billion in retroactive cuts to be distributed in the next three months, to contribute to growth going forward, in the context of a supportive macroeconomic environment. We are thus doing our part to contribute to strong and stable growth worldwide.

A key focus of our discussions this weekend will be the need to strengthen the international financial institutions. As I emphasized in Detroit last week, I believe we can better focus the knowledge and skills in these institutions and help them be more effective in achieving economic development around the world.

For the IMF [International Monetary Fund], this means careful monitoring and prompt decisions before financial crises occur. And for the MDBs [multilateral development banks], it means making real strides in increasing productivity growth and improving standards of living throughout the world. The MDBs need to spark new hope of a brighter future. With more than 1.2 billion people around the world living on less than $1 a day, there is no question that we need to achieve a new level of success in reducing poverty. We believe that continually improving skills and ideas and building an entrepreneurial environment that encourages individual initiative are of fundamental importance.

We agree with others in the G-7 that the MDBs need to coordinate better among themselves, improve their own transparency and accountability, advocate more strongly for good governance in borrowing countries and reconsider the ways in which they price their loans. In Rome, I will make clear our commitment to these improvements. I will also advocate an increased focus on education and an increased reliance on grants as a credible mechanism for financing key development priorities in the poorest countries.

I also plan to give our support to the Financial Action Task Force [FATF] work on money laundering. Progress has already been made by several of the nations identified by the FATF, and I'm optimistic that the FATF process will generate further improvements. I am pleased to report that on another element of the financial abuse agenda -- the OECD [Organization for Economic Cooperation and Development] harmful tax practices initiative -- we have made substantial progress in focusing the initiative on its core element of information exchange.

Ministers will want to touch on a number of issues in preparation for talks among the Heads of State -- notably progress in providing debt relief and the need to move beyond debt relief in promoting economic and productivity growth in the poorest countries. Finally, my colleagues and I will meet with Russian Finance Minister Kudrin and discuss recent progress in Russia on market-oriented economic reforms and the creation of a more favorable investment climate.