Finance ministers promise action on global crisis but not increased spending
Finance ministers from the world’s leading economies pledged Saturday to “take whatever action is necessary” to restore growth, but they failed to agree on the coordinated spending packages that the U.S. says would help speed a global recovery.
Instead, the finance chiefs of the Group of 20 nations urged the immediate implementation of already announced fiscal stimulus plans in individual countries and said the key priority would remain getting credit flowing out of banks still wary of lending money.
The summit’s participants, representing developed economies and major emerging ones, promised to boost support of institutions such as the International Monetary Fund to help rescue countries in grave economic danger. In a communique, the G-20 also committed itself to intensifying oversight of the global financial system.
“I’m very pleased by the strength of the commitment we saw around the room today, and with that kind of commitment, recovery will come sooner,” U.S. Treasury Secretary Timothy F. Geithner told reporters after the meeting in the town of Horsham, in southern England. “You see a very strong recognition of the scale of the challenges presented by this crisis and I think a very strong sense of urgency about the need to act.”
But Geithner left the summit without an agreement to collectively beef up spending packages to stimulate economic demand amid rising unemployment and fear of widespread deflation.
The Obama administration has been lobbying for such a plan, with some economists recommending fiscal stimulus packages equal to about 2% of annual global gross domestic product. But Washington has been disappointed by the responses of European partners that say they have loosened government purse strings enough.
Nations such as France and Germany say they are leery of piling up more public debt. They want more time to see how their current stimulus plans are working, and argue for better financial regulation to help pull the global economy out of crisis.
Rifts between the United States and European nations had grown increasingly evident before the summit, and caused some officials on both sides of the Atlantic to play down expectations for what would come out of the talks. The G-20’s statement wound up meeting those lowered expectations, pledging “sustained” action to help the global economy get back on track but glossing over areas of disagreement.
It is unclear what more can be expected from the event for which Saturday’s meeting was in essence a dress rehearsal: the April 2 summit here in London of all G-20 nations’ heads of government, including President Obama.
But in Washington, Obama rejected suggestions of any divisions between the United States and other countries.
“I don’t know where this notion has emerged that somehow there are sides developing with respect to the G-20,” he told reporters. “I can’t be clearer in saying that there are no sides. . . . We think that we have to take a whole range of approaches.”
One area of agreement put forward by the finance ministers was “to fight all forms of protectionism and maintain open trade and investment.” The U.S., France, Britain and others have recently traded accusations over alleged protectionist practices benefiting, for example, their respective auto industries.
Among the strengthened financial oversight measures outlined Saturday was the need for a register of credit-rating companies, which many analysts accuse of acting recklessly and exacerbating the worldwide financial crisis.
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