Finance officials of world's major economies express confidence that they can meet goal of boosting global growth by US$2T over the next five years, pledge to develop concrete proposals for September meeting in Australia
April 14, 2014
– Finance officials of the world's major economies expressed confidence Friday that they can meet an ambitious goal of boosting global growth by $2 trillion over the next five years.
That's despite a variety of threats including rising political tensions over Russia's actions in Ukraine.
Finance ministers and central bank presidents of the leading rich and developing nations issued a joint statement that papered over substantial differences in such areas as central bank interest rate policies and whether to hit Russia with tougher sanctions because of its dealings with Ukraine.
The final Group of 20 communique pledged to keep working on concrete economic reforms that could boost global growth by 2 percent over the next five years. But finance officials concede that the economic reforms needed to achieve that goal will in many cases be politically difficult.
Australian Treasurer Joe Hockey said all the finance ministers realized that hard decisions would have to be made in terms of reforming labor market policies and dealing with budget deficits.
"It is hard but that is the only way we are going to grow the economy," Hockey, who is chairman of the G-20 this year, told reporters at news conference following the group's two days of discussions.
The finance ministers agreed to develop concrete proposals for each of their countries and present those plans at a September meeting in Australia in preparation for a G-20 leaders' summit on Nov. 15-16 in Brisbane that will be attended by President Barack Obama and leaders of the other nations.
The United States was represented in the discussions Friday by Treasury Secretary Jacob Lew and Federal Reserve Chair Janet Yellen.
Lew on Thursday had raised the possibility in a meeting with Russian Finance Minister Anton Siluanov on Thursday that the Obama administration was willing to impose "additional significant sanctions" if Russia escalates the Ukraine situation.
Treasury said in a statement that Lew described Russia's annexation of the Crimean Peninsula as "illegal and illegitimate."
That tough language from the U.S. was missing from the statement issued by the G-20, a group that includes Russia as a member.
Instead, the G-20 finance officials said they were closely monitoring the economic situation in Ukraine, "mindful of any risks to economic and financial stability."
The group endorsed the $14 billion to $18 billion loan package that the International Monetary Fund has developed to help Ukraine avoid a financial collapse. IMF officials have said the IMF support program will likely be approved by the agency's board of directors by the end of this month or early May.
The United States and various European nations have already imposed an initial round of sanctions aimed at punishing Russia for its annexation of the Crimean Peninsula.
The United States is raising the prospect of tougher penalties if Russia attempts to annex parts of Eastern Ukraine, but European officials have been hesitant to go further, worried about possible economic retaliation by Russia.
But at a news conference late Friday, Lew insisted that there was strong support for tougher sanctions if Russia continues to escalate the situation in Ukraine.
Lew said that the Western allies "stand together in asking Russia to step back."
In a separate action, the Treasury Department issued a new round of sanctions on various officials who have supported Russia's annexation of Crimea.
The United States came in for criticism in the G-20 communique for the failure of Congress to approve U.S. funding for the IMF that is needed to implement a reform program that the 188-nation lending agency adopted in 2010.
That program would give the IMF more resources to help countries in economic distress and provide greater voting to emerging economies such as China.
But the measure has languished in Congress for years and supporters failed again in March to win congressional approval.
The G-20 officials said they were "deeply disappointed" with the continued U.S. delay and said if approval was not obtained by the end of this year, the IMF should explore other options. The statement did not explain what options might be available if there is continued U.S. inaction.
Japanese Finance Minister Taro Aso said that the IMF will have to consider what alternatives exist to move forward with IMF reforms.
German Finance Minister Wolfgang Schaeuble told reporters that more leadership was needed from the United States, referring to America as "the indispensable nation ... we need you."
The G-20 statement dropped a lengthy section that had been included in the February statement concerning the need for continued low interest rate policies by major central banks.
Asked about that change, British Chancellor of the Exchequer George Osbore said, "I wouldn't read too much into that" and joked "we're trying to keep the communique much shorter."
He noted that the Federal Reserve and the Bank England were moving cautiously to reduce stimulus efforts as the U.S. and British economies improve. However, some critics have expressed concerns that there is a danger that central banks could move too quickly to reduce support before labor markets have completely recovered.
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