G-20 countries pledge stronger efforts
WASHINGTON (AP) — World finance leaders are pledging to pursue further actions to bolster a disappointingly weak global recovery. They also reaffirmed their commitment to avoid using their currencies as an economic weapon to gain unfair advantage in foreign trade.
Finance ministers and central bank presidents from the leading rich and developing nations, or Group of 20, wrapped up two days of talks Friday with a joint statement that said they had managed to avoid some of the biggest economic threats, but growth was still too weak in many countries and unemployment too high.
The joint statement revealed no major new policy initiatives but did urge the United States and some other countries to emphasize efforts to jump-start growth even if that meant less emphasis on deficit reduction in the near term.
"Further actions are required to make growth strong, sustainable and balanced," the G-20 said in their joint statement.
The United States was represented at the talks by Treasury Secretary Jacob Lew, who was attending his first G-20 meeting since taking office in late February, and Federal Reserve Chairman Ben Bernanke. The discussions were led by Russian Finance Minister Anton Siluanov whose country is leading the G-20 this year.
The G-20 joint statement singled out the recent aggressive credit-easing moves pushed by Japanese Prime Minister Shinzo Abe, saying they were intended to stop prolonged deflation and support domestic demand.
Those comments were viewed as giving a green-light to Japan's program, which has driven the value of the yen down by more than 20 percent against the dollar since October. That sizable decline has raised concerns among U.S. manufacturing firms that Japan's real goal is not to fight deflation, a destabilizing period of falling prices, but to weaken the yen as a way to gaining trade advantages.
To address those concerns, the G-20 did repeat language it used in February that all countries should not use their currency as a trade weapon and guard against policies that could trigger currency wars.
Japanese officials told reporters following the discussions that they were pleased by the support the G-20 had given them to pursue growth policies in an effort to lift the world's third largest economy out of its two-decade slump.
Haruhiko Kuroda, head of the Bank of Japan, said that Japan would continue with its monetary easing policies which he said were aimed at stimulating domestic growth and fighting deflation and not an effort to gain trade advantages.
"There has been international understanding and acceptance of this so we can have further confidence to appropriately conduct monetary policy," he told reporters at a briefing after the G-20 talks ended.
Siluanov told reporters at a news conference that the group did not spend as much time discussing currency issues as they had in February.
The United States had sought to get a strong endorsement of the need to emphasize growth, given the weakness of the global economy, rather than trying to achieve quick progress on cutting deficits.
However, other nations, led by Germany, have resisted a move away from austerity programs, saying it is critical to keep making progress in getting government deficits under control.
German Finance Minister Wolfgang Schaeuble apologized to a Washington audience for being late for a speech after the G-20 discussions, saying, "on reduction of indebtedness ... we have a little bit of differences of opinion all over the world, to be very frank, and that's the reason I am a little bit late."
Schaeuble said the German position remains that "if you promise to deliver only immediately on growth, you will only create the next bubble" in asset prices.
The G-20 talks came in advance of meetings of the steering committees of the 188-nation International Monetary Fund and its sister organization, the World Bank. Those talks began Friday and were scheduled to conclude on Saturday.
"Strengthening global demand is imperative and must be at the top of our agenda," Lew said in remarks Friday before the IMF panel. "Stronger demand in Europe is critical to global growth."
The G-20 statement said that there was an urgent need for the 17-nation euro currency area to move towards a banking union and reduce the "financial fragmentation" that now exists.
Canadian Finance Minister Jim Flaherty said that the G-20 countries remain committed to setting hard targets for reducing debt to a certain percentage of the economy, an idea first raised at an economic summit in Toronto in 2010. He said the issue would be explored more when leaders of the G-20 countries hold their summit in Russia in September.
However, Siluanov told reporters he did not believe there was widespread support for setting hard deficit targets.
G-20 leaders in 2010 had agreed on a goal of reducing their annual budget deficits by half. Siluanov said Friday that many countries support taking a more flexible approach, particularly if a country's economy has slowed. Slower growth can make it harder for a country to cut a budget gap.
The communique said that "more needs to be done to address the issues of international tax avoidance and evasion in particular through havens." The financial crisis that hit the Mediterranean island of Cyprus earlier this year revived concern over countries that serve as tax havens.
In Cyprus, banks held more than $162 billion in assets or roughly seven times the country's total GDP. Much of that money came from wealthy Russian investors.
Associated Press writers Harry Dunphy, Matthew Pennington and Desmond Butler contributed to this report.