G-20 finance officials decry lack of global growth, remain split on action
Britain Chancellor of the Exchequer George Osborne, left, talks with U.S. Treasury Secretary Jack Lew during a group photo of the G20 finance ministers and central bank governors on the sidelines of their meeting at World Bank Group International Monetary Fund Spring Meetings in Washington, Friday, April 19, 2013. (AP / Charles Dharapak)
The Associated Press
Published Saturday, April 20, 2013 7:16AM EDT
Last Updated Saturday, April 20, 2013 1:10PM EDT
WASHINGTON -- World finance leaders say they are determined to attack a sluggish global economy in which growth is too weak and unemployment too high. Their problem is arriving at a consensus over the proper mix of policies.
Finance ministers and central bank presidents from the world's biggest economies issued a joint statement Friday that papered over stark differences between opposing views. The United States and other countries are pushing for less budget austerity and more government stimulus while Germany and others contend that attacking huge budget deficits should be job No. 1.
The discussions were scheduled to wrap up Saturday with meetings of the steering committees of the 188-nation International Monetary Fund and its sister lending agency, the World Bank.
The G-20 joint statement revealed no major new policy initiatives and sought to straddle the divide in the growth-and-austerity argument.
The United States is being represented at the talks by Treasury Secretary Jacob Lew and Federal Reserve Chairman Ben Bernanke.
"Strengthening global demand is imperative and must be at the top of our agenda," Lew said in remarks late Friday before the IMF policy-setting group. "Stronger demand in Europe is critical to global growth."
However, other nations, led by Germany, have resisted a move away from austerity programs, saying they are critical to 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 Friday, 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."
Dutch Finance Minister Jeroen Dijsselbloem, the head of the Eurogroup, encompassing the 17 finance ministers whose countries use the euro currency, said that European nations needed to keep pushing to reduce huge budget deficits but "we can and will adjust" the speed that the deficit cuts are implemented to take into account economic conditions.
Japan singled out in statement
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 per cent against the dollar since October. That sizable decline has raised concerns among U.S. manufacturing companies 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 gain 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, "There has been international understanding and acceptance of this, so we can have further confidence to appropriately conduct monetary policy."
The G-20 statement also said that there was an urgent need for the euro currency area to move toward a banking union and reduce the "financial fragmentation" that now exists.
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.