1. The restoration of sustained non-inflationary growth is critical to our efforts to deal with domestic and international economic challenges. It will help put more of our citizens to work and off the unemployment lines; generate the resources to meet pressing social needs; and reduce growing trade imbalances and protectionist pressures. It will help provide the increased investment opportunities to enhance our future growth.

2. Our policies to strengthen growth must reflect our differing economic conditions. However, national objectives of increased, sustainable non-inflationary growth converge with our international interests. We will cooperate in the economic policy coordination process in pursuit of these objectives. To that end, we have consulted closely and have agreed on the following approach which is now being implemented.

• In North America, economic recovery has begun, and inflation remains under control. The United States and Canada are implementing measures to improve domestic savings and investment, primarily through substantial reductions in fiscal deficits. The positive effects are already visible in a substantial reduction in long-term interest rates.

• In Europe, where private demand is weak and unemployment rising in some countries and recovery in its early stages in others, the European Growth Initiative agreed in Edinburgh is now being implemented. Interest rates in most countries have declined from high levels. The implementation of medium-term budget consolidation plans and containment of labor costs and inflation pressures will create room for a further decline in interest rates that should make a substantial contribution to growth.

• In Japan, where domestic demand has been weak, substantial additional economic measures have been announced. These measures represent a welcome contribution toward the important goal of sustained non- inflationary growth based on increased domestic demand, which will contribute to reducing the large external imbalance.

3. The further opening of the international trading system is indispensable for maximizing world growth. A successful growth strategy requires prompt and appropriate conclusion of the Uruguay Round. Protectionism retards growth and must be resisted.

4. Strengthening the long-term growth potential of our economies and bringing down unemployment require a broad range of structural reforms, reflecting the different circumstances in each country. These include: labor market reforms and greater flexibility in markets; measures to increase savings and investment; the redirection of government spending toward investment in physical and human capital; curbing the burgeoning cost of health care; and addressing the economic effects of aging populations. A report on these issues will be submitted by the G-7 Finance Ministers to the Heads of State and Government at the Tokyo Summit.

5. A cooperative strategy for non-inflationary growth, based on sound macroeconomic policies, structural reforms and an open international trading system, will help to create and maintain conditions in currency markets that reflect economic fundamentals. Structural reforms that increase the flexibility of our economies will promote rapid domestic adjustment to international developments and thus reduce the exchange rate changes that are required to restore external balance.

6. We agreed that exchange rates should reflect economic fundamentals and that excessive volatility is undesirable. We reviewed recent developments in foreign exchange markets and affirmed our continued commitment to close cooperation in exchange markets.

7. We welcome the results of the Russian referendum. They represent a major endorsement of President Yeltsin and his Government's commitment to democracy and economic reform, as well as a mandate for change. It is our strong hope that Russia will now implement far-reaching measures to stabilize prices and promote private enterprise. Such steps would allow Russia to fully utilize the multilateral support package for Russian reform announced by the G-7 in Tokyo earlier this month. In this connection, we welcome the successful negotiation of the World Bank's Oil Rehabilitation Loan and the IMF's prompt action in establishing the new Systematic Transformation Facility.

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Source: Canada Department of Finance.