Speech by Peruvian Minister of Economy and Finance, Efrain Goldenberg
  
Lima, June 9, 2000

Ladies and Gentlemen:

It is truly an honor for me, as Chairman of the Andean Community Advisory Council of Treasury or Finance Ministers, Central Banks, and Economic Planning Officers, to report to you on the agreements signed at the Fourth Regular Meeting of the Advisory Council held yesterday.

At that meeting, we members of the Advisory Council exchanged ideas about the advances needed in macroeconomic policy harmonization in order to strengthen the Community.

Before listing the agreements reached at that meeting, I would like to emphasize the satisfactory role the Advisory Council has played since its creation by the Andean Presidents in April 1997, in drawing up a proposal for harmonizing macroeconomic policies among the Andean Community countries. In a little under two years of activities, we have been able to develop an important working agenda geared toward consolidating and advancing Andean integration.

This forum has become the space for the shared analysis and evaluation of the progress made by the Andean economies, where top-level economic and financial authorities from the five Member countries exchange important experiences with their economic policies and individual performance results.

Thanks to this valuable interaction, we have been able to progressively define a set of coordinated measures in various economic fields for the purpose of dovetailing macroeconomic policies, preparing comparable statistical data, and harmonizing tax provisions, among other things.

New challenges lie ahead for the Advisory Council in coming years, created by the growing and dynamic globalization of international markets. Accordingly, the Treasury or Finance Ministers, Central Bank Presidents, and Economic Planning Officers of the Andean Community signed a Final Report at the close of yesterday’s meeting, defining the pending agenda for the Advisory Council in coming years, particularly with regard to macroeconomic policy harmonization.

In that document, we ratify our conviction that the economic stability of each Member country is in the Community’s interest and, consequently, reiterate our unswerving determination to expedite the harmonization of macroeconomic policies and goals and to create and develop Community mechanisms for cooperation in promoting and reinforcing the economic stabilization of the Member countries.

We have also committed ourselves 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 set themselves the target of progressively and permanently reducing their annual inflation rates to one-digit figures. We have thus arranged to incorporate the following mechanisms and agreements:

First:

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, and

Second:

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, so that the advances made toward their attainment may be submitted to the next meeting of the Advisory Council.

The Advisory Council, at this Fourth Meeting, also set a deadline at December 31, 2000 for proposing a second criterion for macroeconomic policy harmonization that has to do with fiscal targets. It accordingly decided to form a group of experts, made up of delegates from the Community’s Member countries who, with the support of the General Secretariat, the FLAR, and the CAF, would submit a proposal to the Advisory Council for establishing this harmonization criterion.

It was also agreed to acknowledge the importance of taking effective action to bring about progressive tax harmonization (particularly of indirect taxes). The Advisory Council therefore decided to set up a permanent working group to develop the subject and submit biannual progress reports to the Council, bearing in mind the following: the goal of forming an 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 national tax systems.

The Advisory Council has also deemed it advisable 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. It decided, as a result, to renew its support for the study being made by the CAF and the FLAR for the purpose of bolstering and harmonizing the subregion’s banking regulation and supervisory systems.

We also agreed at yesterday’s meeting to point up the work being accomplished by the Andean Community Secretariat, the CAF, and the FLAR towards advancing Andean integration and macroeconomic policy harmonization.

Lastly, the Advisory Council worked on the Declaration to the XII Andean Presidential Council, which has been distributed, setting out the agreements that I have summarized for you.

Satisfactory attainment of the ambitious targets outlined by the Advisory Council at its Fourth Meeting will undoubtedly require our utmost efforts. We, in Peru, are convinced that this undertaking will be carried out in the same conviction and with the same impetus and dedication as those given to launching that important regional integration project whose consolidation, we note with pride today, has already begun.

Thank you very much.