Noting that the global economy is recovering faster and emerging stronger from the recession, a meeting of G-20 finance ministers on Friday said the progress differs within and across regions, though unemployment is still high in many countries.
“The global recovery has progressed better than previously anticipated largely due to the G-20’s unprecedented and concerted policy effort. However, it is proceeding at different speeds within and across regions, and unemployment is still high in many economies,” a communiqussued at the conclusion meeting here said.
It also observed that policy support should be maintained until the recovery is firmly driven by the private sector and becomes more entrenched in economies where growth is still highly dependent on policy support and consistent with sustainable public finances.
“The world economy is coming back stronger, more quickly than many people expected. And we heard today, and you heard last night, from, really, countries around the world, encouraging signs of building momentum of broader recovery. And I think that’s very encouraging,” US Treasury Secretary Timothy Geithner told reporters after the meeting.
“We have a lot of work to do still. We want to work to reinforce that recovery. And as I’m sure we’ll discuss, we want to make sure that as we are working to reinforce a recovery led by the private sector, we want to make sure we lay conditions for a more balanced global pattern of global growth. That’s going to require a very substantial set of reforms across the major economies over the next several years,” he said.
Observing that there was a broad consensus on the core elements of reforms, Geithner said, “But the key test is going to be when we translate that into, for example, a new global agreement on capital requirements, capital standards, liquidity requirements, leverages ratios.”
In its communiquthe G-20 said countries should develop credible strategies for reducing stimulus spending and to allow ultra-low interest rates to rise to more normal levels.
G-20 is the group of twenty finance ministers and central bank governors, established in 1999, to bring together important industrialised and developing economies to discuss key issues in the global economy.
The G-20 also asked the International Monetary Fund (IMF) to analyse in detail a proposal to levy taxes on big banks and other financial institutions to stem risk and pay for possible financial failures.
The statement said such measures would look at how the financial sector could make a fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system.
“We are committed to developing, by end-2010, internationally agreed rules to improve both the quantity and quality of bank capital and to discourage excessive leverage. These rules will be phased in as financial conditions improve and economic recovery is assured, with the aim of implementation by end-2012,” the communiquaid.
The G-20 countries lauded the progress by the financial action task force in the fight against money laundering and terrorist financing.
“We also welcomed the report by the Global Forum on Tax Transparency and Exchange of Information and the development of a multilateral mechanism for information exchange, which will be open to all countries,” it said.
The G-20 also asked the IMF to deliver the governance reforms for international financial institutions by the November Seoul Summit.
“While G20 countries should adopt policy frameworks that are appropriate to their individual circumstances, there are clear benefits to collective action to achieve this goal. Such an approach would also raise living standards in emerging markets and developing countries,” the communiquaid.
“Given that it may take several years to realise the benefits of many policy reforms, the G-20 countries should consider initiating actions now to attain stronger, and more balanced and sustainable growth over the medium term,” the statement said.
“Policy frameworks should be forward looking to guide expectations and to be sufficiently flexible to manage potential risks and facilitate adjustment to shocks so that strong, sustainable and balanced growth can be maintained,” it added.