Report of the Fourth Regular Meeting of the Advisory Council of Treasury or Finance Ministers, Central Banks, and Economic Planning Officers

The Andean Community Advisory Council of Treasury or Finance Ministers, Central Banks, and Economic Planning Officers, meeting in the city of Lima, Peru, on June 8, 2000,

WHEREAS:

  • Economic integration contributes to better positioning within an increasingly open and globalized world economy and to the strengthening of national economies by exploiting the advantages of each of them to build a strong and dynamic subregional economy;

  • The commitment to form an Andean Common Market by the year 2005, assumed by the Eleventh Andean Presidential Council, involves working to attain the progressive transparency, harmonization, and dovetailing of domestic provisions and macroeconomic policies in order to guarantee efficient resource allocation and equitable competition within the subregion; and

  • Given the importance of intra-Community trade as a source of jobs created by the export of goods with a high value added, together with the role played by external savings in capital formation and the consequent increase in productivity, a stronger commitment is needed to the search for and implementation of Community agreements and mechanisms to uphold the harmonization of macroeconomic targets and the economic stability of the Member countries.

AGREES:

  1. To reaffirm its conviction that it is in the Community’s interest for each Member country to have economic stability. As a result, it reiterates its unswerving determination to further the harmonization of macroeconomic policies and goals and to create, develop, and strengthen Community mechanisms for cooperation in promoting and backing the economic stabilization of the Member countries.

     

  2. To perfect the first criterion for macroeconomic policy harmonization, adopted by the Advisory Council at its Third Regular Meeting and backed by the Eleventh Andean Presidential Council, whereby the Member countries committed themselves to progressively and permanently reduce their annual inflation rates to a one-digit figure, by incorporating the following mechanisms and agreements:

  1. To entrust the General Secretariat with presenting an analytical report to the Advisory Council biannually, in coordination with the Latin American Reserve Fund (FLAR), on the fulfillment by each of the Member countries of the harmonization criterion adopted.. The reports will be submitted in writing in the first half of July and January of each year and will be considered at the following meeting of the Advisory Council .

  2. To instruct the Andean Community Central Banks to prepare studies, in collaboration with the FLAR and the Community’s General Secretariat, of coordinated inflation targets. The advances made in those studies will be presented at the next meeting of the Advisory Council.

  1. To propose a second criterion for macroeconomic policy harmonization connected with fiscal targets before December 31, 2000. A group of experts will be set up, consisting of delegates from the Andean Community countries, who will enjoy the backing of the General Secretariat, the FLAR, and the CAF, to put forward the corresponding proposal to the Advisory Council

In order to accomplish this objective, the members of the Advisory Council will accredit their delegates before the General Secretariat no later than June 30, 2000.

  1. To acknowledge the importance of taking effective action to bring about progressive tax harmonization, particularly of indirect taxes. A permanent working group will be established to develop the subject, bearing in mind the goal of forming the Andean Common Market; the need to create relatively homogeneous conditions for competition within the subregion; the elimination of barriers to intra-Community trade; and the strengthening and improvement of the national tax systems.

    The Ministers of Economy, Treasury, or Finance will accredit their delegates before the General Secretariat by June 30, 2000. This working group will make biannual progress reports to the Advisory Council.

  2. To underscore the importance of the efforts of the Member countries to strengthen their national financial systems, in the conviction that this is essential for promoting economic stability, boosting domestic saving, and generating investment. In this connection, the Advisory Council gives its support to the studies being made by the Andean Development Corporation and the FLAR for the purpose of bolstering and harmonizing the subregion’s banking regulation and supervisory systems.

     

  3. To point up the work being done by the Andean Community General Secretariat, the CAF, and the FLAR to move ahead with Andean integration and macroeconomic policy harmonization.

     

  4. To approve the attached Declaration for presentation to the Twelfth Andean Presidential Council.

     

  5. To express its appreciation to the government of Peru and in particular to Dr. Efraín Goldenberg, Peruvian Minister of Economy and Finance, for the hospitality shown in holding the Fourth Regular Meeting of the Advisory Council.

For the Government of Bolivia,
Central Bank of Bolivia
Armando Méndez Morales
Director

Ministry of the Treasury
Rodney Pereira
Representative of the Minister and Executive Director of UDAPE

For the Government of Colombia,
Bank of the Republic
Gerardo Hernández
Executive Manager (a.i.) and Secretary of the Board of Directors

Ministry of the Treasury and Public Credit
Carlos Felipe Jaramillo
Technical Vice-Minister

For the Government of Ecuador,
 Central Bank of Ecuador
José Luis Ycaza
Chairman of the Board

For the Government of Peru,
Central Reserve Bank of Peru
Renzo Rossini
Manager for Economic Studies

Ministry of Economy and Finance
Efraín Goldenberg
Minister

For the Government of the Bolivarian Republic of Venezuela,
Central Bank of Venezuela
Diego Luis Castellanos
President

Ministry of Finance
José Alejandro Rojas
Minister

Ministry of Planning and Development
Jorge Giordani
Minister

 

Attachment

Declaration of the Advisory Council of Treasury or Finance Ministers, Central Banks, and Economic Planning Officers to the

Twelfth Andean Presidential Council

The Advisory Council of Treasury or Finance Ministers, Central Banks, and Economic Planning Officers, gathered at their Fourth Regular Meeting on June 8, 2000 in the city of Lima, Peru, and moved by its interest in contributing to the advancement of the integration process, presents to the Twelfth Presidential Council of the Andean Community the following:

DECLARATION

CONSIDERING:

  • The importance of intra-Community trade relations for upholding a development strategy that will lead to the subregion’s better positioning within the world economy.

  • The large capacity for recovery shown by subregional trade this year;

  • Andean integration targets and prospects, particularly the intention to establish the Andean Common Market by the year 2005, which calls for greater efforts to harmonize macroeconomic policies;

  • The need to build economic and trade integration on a strong and coherent foundation that will create a trust in the economic agents and their credibility;

DECLARES:

  1. Its unwavering commitment to the process of Andean integration in the conviction that it is an effective means to create jobs by exporting goods with a high value added and to attract the external savings that are needed for capital formation and the consequent increase in productivity. For that reason, it is willing to accelerate and broaden its working agenda in order to bring about greater economic integration by harmonizing and dovetailing macroeconomic policies and goals that bolster intra-Community trade; national stabilization and development efforts; and a better positioning within the global economy.

     

  2. Its will to work together with other bodies of the Andean integration system in creating the necessary conditions for the unimpeded circulation of goods, services, capital, and persons.

     

  3. Its determined support for the efforts to advance the studies in the areas of inflation targets, fiscal results, and macroeconomic harmonization.

     

  4. Its conviction that national economic policies have more credibility when the countries act jointly. That is why it is essential to abide completely by Community provisions and to give its full support and backing to the integration process.