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Updated: April 24, 2010 14:50 IST

Global financial leaders hopeful of economic recovery

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U.S. Treasury Secretary Tim Geithner speaks to reporters at the close of the first day of the G-20 Meeting of Finance Ministers and Central Bank at the World Bank headquarters in Washington, on Friday. Photo: AP.
U.S. Treasury Secretary Tim Geithner speaks to reporters at the close of the first day of the G-20 Meeting of Finance Ministers and Central Bank at the World Bank headquarters in Washington, on Friday. Photo: AP.

Despite a deepening Greek debt crisis, global financial leaders declared on Friday that the world’s economy is recovering faster than expected from the worst recession in decades.

Finance ministers and central bank governors of the world’s 20 major economies credited the massive amounts of government stimulus that have been provided. Their joint statement did not address the Greek debt crisis directly, but it did say the countries were committed to continue efforts to ensure a sustained worldwide rebound from the recession.

“The global recovery is better than anticipated largely because of unprecedented efforts of the G—20 countries,” Canadian Finance Minister Jim Flaherty told reporters at a news conference with South Korean Finance Minister Yoon Jeung—hyun at the conclusion of the talks.

The G—20 is composed of the world’s wealthiest industrial countries plus major emerging economies such as China, Brazil, India, South Korea and Russia. The United States was represented by Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

The G—20 leaders papered over sharp differences over proposed new taxes on banks to keep taxpayers from being saddled with the cost of future financial bailouts. The proposed new taxes would also be aimed at restraining the kind of excessive risk taking that led to the crisis.

The communique said that countries would work together to come up with ways to ensure that banks make a “fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system.”

The goal is to present a plan to G—20 leaders when they meet in late June in Canada.

Canada’s conservative government is leading the opposition to new bank taxes, arguing that imposing a tax would not be fair to its banks which did not suffer costly failures in the recent crisis.

“Some countries are in favour,” Mr. Flaherty said. “Some countries quite clearly are not. It depends on whether a country has had to use taxpayer dollars to bail out their banks.”

The rapidly escalating Greek debt crisis threatened to overshadow the G—20 talks, which were being held in advance of weekend discussions of the policy—setting panels of the International Monetary Fund and its sister lending agency, the World Bank.

Even before the talks began at the headquarters of the 186—nation IMF, the International Monetary Fund issued a statement pledging an expedited review of Friday’s request by the Greek government for an emergency loan package. IMF Managing Director Dominique Strauss—Kahn scheduled one—on—one discussions for the weekend with Greek Finance Minister George Papaconstantinou.

Mr. Flaherty told reporters that the worsening debt crisis in Greece did come up during the G—20 talks on Friday.

“It’s a source of concern,” Flaherty said, noting that G—20 officials are closely following the negotiations between Greece and the IMF over a reform package that would allow the institution to provide emergency support.

As for future global problems, the G—20 repeated a pledge that all countries will work to eliminate dangerous imbalances, but it avoided prodding China to allow its currency to appreciate against the dollar, a key U.S. aim.

The Obama administration has pushed Beijing to allow its currency’s value to rise, a change that U.S. manufacturing groups contend will help lower America’s large trade deficits and help recoup some of the more than 8 million jobs lost in the United States since the recession began in late 2007.

In addition to discussions as a group, the G—20 ministers held a series of separate meetings throughout the day Friday with individual countries.

Brazilian Finance Minister Guido Mantega said that during his meeting with Chinese Finance Minister Xie Xuren that the issue of imbalances in the currency exchange system was not discussed, but instead the two talked about ways to bolster their countries’ trade with each other.

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