G20 ministers meet amid divisions

BBC News, Saturday, 14 March 2009

Recession remedies?: The ministers and central bankers face a huge task

Ministers from the G20 group of rich and emerging economies are meeting in the UK amid rifts over how to tackle the worst downturn in decades.

The ministers, joined by central bankers, are to discuss stimulating their economies out of recession.

The US is calling for increased public spending. But some European governments stress the need to change the rules governing financial markets.

They aim to agree on an agenda for next month's leaders summit in London.

The G20 is an informal grouping of the world's most powerful countries that together represent 85% of the world's economy. It includes both major industrial powers such as the US and Germany, and emerging economic powers such as Brazil and China.

This weekend's meeting is being held in Horsham, in the southern English county of Sussex.

Opening the session on Saturday UK Chancellor Alistair Darling said he was "quite sure" progress would be made on the meeting's three main aims - supporting economies, getting bank lending going again, and making sure the whole world benefited from the action taken.

The US, supported by Britain, wants other governments - especially those in continental Europe - to do more to bring their economies out of recession, says the BBC's business correspondent Mark Gregory.

But European governments have indicated they are unlikely to strain their finances by agreeing to much more spending until they have seen some results from the first round of stimulus programmes already launched, says our correspondent.

UK Chancellor Alistair Darling (L) has played down talk of a rift with the US

German Chancellor Angela Merkel said this week that the issue was not to spend more, but to put in place a system that would help prevent similar crises in future.

Mr Darling - who is chairing the meeting - played down talk of rifts ahead of next month's G20 summit.

"Generally, I think we are in agreement on the issues," the UK chancellor told the BBC.

"Of course, if you have 20 people in a room, there will be differences. Each country has to decide what to do to their economies."

He told BBC Radio Four's Today programme people recognised that the world was facing "extraordinary circumstances". The meeting needed a commitment that no country would "hold back" from doing whatever was necessary to support their economies, he said.

"It's not just an economic necessity, but when you consider that possibly 90 million people across the world might go back into poverty, it's also a moral imperative," he added.

Boost for IMF?

Correspondents say the finance ministers want to signal they are working together to tackle the most serious economic downturn in 80 years.

"The present crisis cannot be solved by one country alone. Everyone must work together both to rebuild the financial sector and provide a fiscal stimulus," said Japanese Finance Minister Kaoru Yosano.

The meeting is also likely to focus on the need for tougher regulation of banks.

 

G20 LONDON SUMMIT

World leaders will meet next month in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit. The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.

Q&A: G20 Summit

Some progress has been made on this front. Switzerland, Austria and Luxembourg on Friday said they would relax banking secrecy rules.

An increase in funding for the International Monetary Fund (IMF) is also on the agenda.

US Treasury Secretary Tim Geithner has proposed tripling the IMF's resources to $750bn to ensure it can help all those caught in the crisis.

Japan has already offered $100bn. The EU has backed an increase to $500bn and is considering a loan of $100bn.

However, Brazil, Russia, India and China - known as the Bric countries - said they would not contribute extra cash unless they were given extra voting power.

"We will only agree to increase capital to the IMF after the reform the (IMF) quotas is carried out, because there is still an imbalance in our participation in the IMF," Brazilian Finance Minister Guido Mantega said after meeting officials from the Bric countries.

The IMF's voting structure means that the US and Europe have a greater say on what it does.

© MMIX

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