At the same time, we have to be mindful that the countries within this group are at various stages of economic development, ranging from poor developing nations with annual per capita incomes of about US Dollars 160 to very wealthy industrialized nations with per capita incomes of about US Dollars 36,000. Hence, although we may, in general, say that we derive our strength through diversity, we still have to take serious note that the great disparity in living standards is an issue that needs to be uppermost in our minds if we are to move forward in harmony and brotherhood. In that context, I think it is very appropriate that, this year, the Commonwealth Finance Ministers have decided to focus on several dimensions and options that impact on this issue, which is borne out of the fact that they have selected “Agenda for growth and livelihood”, as this year’s theme for the meeting. Your Excellencies, Distinguished Delegates, In order to critically examine the issue of wealth disparity in perspective, let us take our minds back to the Commonwealth Heads of Government meeting in Singapore in the year 1971. At that meeting, the declaration of Commonwealth Principles was adopted. These Principles acknowledged that wide disparities in wealth existed between different sections of mankind. The Heads of Government also acknowledged that such disparities were too great to be tolerated and that such disparities would create world tension. Accordingly, the Commonwealth resolved to work towards the progressive reduction of these disparities.
On the other hand, growth in advanced economies was weak and euro area GDP fell towards the end of the year. Central banks abroad announced that the key rates would be kept at a low level for a prolonged period. At the monetary policy meeting in March, Norges Bank underlined that weak growth prospects abroad and the strong krone were keeping inflation at a low level and curbing activity in some sectors. The key rate was reduced to 1.5 percent at that meeting. Europe is now in a downturn. Many countries are struggling with large deficits and mounting government debt. Structural reforms are being implemented, pension schemes are being tightened and tax systems are under review. At the same time, tighter credit standards and increased capital requirements will limit the supply of bank credit. In addition, a number of countries must restore competitiveness after a period of high cost growth prior to the financial crisis. In the short run, the tightening measures pull down activity and push up unemployment. Central banks in other countries are using strong measures to prop up activity and inflation. As shown in the chart, key rates among many of our trading partners are close to zero and are expected to remain low for a long period. In the US, UK and Japan the central banks have made large-scale government bond purchases in order to push down long-term interest rates. The European Central Bank (ECB) has also stretched itself, for example by providing long-term loans to banks.