Istanbul, Turkey, October 4, 2009 —
Statement by the Co-Chairmen on behalf of the Group of Trustees

Mr. Jean-Claude Trichet, President, European Central Bank

Mr. Henrique de Campos Meirelles, Governor, Central Bank of Brazil

Mr. Toshihiko Fukui, President of the Canon Institute for Global Studies and Former Governor of the Bank of Japan

Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets meet once each year to review the progress being made on the implementation of the Principles within the framework of the international financial system.

The Trustees noted that the Principles were first published almost five years ago following their general endorsement by the Group of 20. Over the last year, the application of the Principles was seen to be especially important, safeguarding emerging market access to external financing flows from the private sector during a time of exceptional stress in the global financial system. The experience of the last year suggests that emerging market countries with strong policy performance and active investor relations programs have benefited relative to others during periods of market turbulence.

At their meeting on October 12, 2008, the Trustees had called upon the Principles Consultative Group (PCG) to work with the IMF and other international financial institutions to expedite the availability of facilities in support of emerging market economies, and to consider means of stabilizing the environment for emerging markets. In response, the PCG held a number of special meetings aimed at monitoring developments in global capital markets during the crisis, assessing the impacts on emerging markets, and proposing measures to help these countries weather the storm, and also engaged with the managements of the IMF, World Bank, and IFC on ways to increase their support for emerging markets. The Trustees stressed that the PCG is one of the few fora bringing together debtors and creditors from both mature and emerging markets, with increasingly active involvement by international financial institutions, for frank and open policy discussion. Participation in the 24-member PCG is approximately split between individuals from the official and the private sectors.

The Trustees noted that actions taken by the leaders of the Group of 20 have been important in containing the financial crisis and helping to set the stage for economic recovery. For emerging markets, the increase in IMF resources and establishment of the IMF's new flexible credit line, along with the increase in support by the World Bank and other multilateral development banks, have helped to compensate for the shortfall in capital flows. The Trustees agreed that it will be important to maintain and enhance effective channels of communications on critical developments between the private and the public sector and that, in this regard, the PCG is proving to be especially valuable.

As the Trustees reviewed the application of the Principles they noted that a number of emerging market borrowers have achieved good outcomes in cases involving debt restructuring through dialogue and good faith negotiation in line with the Principles. Recent experiences demonstrate the value of good faith negotiations in achieving a successful debt reduction under the enhanced HIPC Initiative.

However, the Trustees noted with concern isolated actions that have been taken in a few cases during the past year, which were inconsistent with the Principles and which, if extended, could risk undermining prospects for more stable market conditions and the restoration of sustainable capital flows. The Trustees stressed the importance of participants-”sovereigns, investors, creditors, and multilateral institutions-”acting in consonance with the principle of transparent, good-faith dealings between sovereign issuers and private-sector creditors.

The Principles are a voluntary approach to debtor-creditor relations, designed to promote stable capital flows to emerging market economies through enhanced transparency, dialogue, good-faith negotiations, and equal treatment. They recognize the particular value of investor relations programs, which are used by a growing number of sovereign borrowers as a framework for implementing the Principles and bolstering investor confidence.

The Trustees also underscored the fact that a rising number of countries are increasing resources devoted to investor relations, while sovereigns with institutionally strong investor relations programs have been able to make active use of these programs to help meet investor needs.

The Institute of International Finance (IIF) serves as the Secretariat to the Trustees and to the Principles Consultative Group (PCG).