G-20 finance ministers to focus on global growth

G-20 finance ministers to focus on global growth

SYDNEY (AP) — The market turmoil sparked by the Federal Reserve's steps toward removing the U.S. economy from life support is expected to be a top agenda item when finance chiefs from the world's biggest economies meet in Sydney this weekend.

The Group of 20 finance ministers & central bankers meeting is a precursor to the main G-20 summit that will be held in the Australian city of Brisbane in November. The meeting's host, Australian Treasurer Joe Hockey, said the Federal Reserve's decision to commence scaling back its stimulus will be a key part of discussions, along with reinvigorating global growth.

In December, the U.S. central bank said it would start reducing its monthly Treasury & mortgage bond purchases, intended to keep interest rates low & support economic recovery in the aftermath of the global recession. Investors responded by pulling out of emerging markets & funneling their money to the U.S. in hopes of higher returns, which contributed to sharp falls in stock markets & the currencies of some developing countries.

p>The G-20, which represents around 85 percent of the global economy, is made up of both wealthy nations & emerging economies from the United States to Saudi Arabia & China.

In a paper prepared for this weekend's meeting, the International Monetary Fund warned advanced economies to avoid prematurely rolling back their stimulus programs. But Hockey has defended the Fed's decision, saying the U.S. has a responsibility to do what is best for itself.

"There is no doubt that the Fed needs to be aware of these international implications in detail, & be mindful of them," the Australian treasurer said Thursday during an Institute of International Finance conference in Sydney. "But ultimately, the Federal Reserve has to operate in a manner that is consistent with its domestic mandate."

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.U.S Secretary of the Treasurer Jack Lew speaks at a press conference during the G20 Finance Ministe …

Federal Reserve Board Chair Janet Yellen, who was sworn in Feb. 3 to succeed Ben Bernanke, will travel to Sydney to attend her first G-20 meeting as head of the U.S. central bank. In her first public comments since taking the job, she said the Fed would take "further measured steps" to reduce its bond buying if the U.S. economy continues to improve.

The key focus of the meeting, however, will be exploring ways to restore global growth amid indications that the world's largest economies are once again slowing. Hockey, who says boosting private investment in infrastructure would assist stimulate growth, wants G-20 leaders to commit to a global growth target higher than the International Monetary Fund's forecast, which is 3.7 percent this year.

In a letter to G-20 members obtained by The Associated Press, U.S. Treasury Secretary Jacob Lew said boosting global growth & creating more jobs will be the G-20's top priority. Lew is attending the meeting & plans to meet with Hockey & finance ministers for Germany, Japan, Brazil & Turkey.

"Despite signs of improvement, global growth remains uneven & well below potential, while unemployment remains stubbornly high in many places," Lew told reporters in Sydney on Friday. "The growth strategies that we will be developing must be ambitious in substance & address both deficiencies in near-term demand as well as longer-term economic challenges."

Another key item will be the failure of the U.S. to pass the 2010 IMF reform package. Last month, Congress rejected a funding request from the Obama administration that would have doubled the IMF's lending capacity to approximately $733 billion & increased the voting power of emerging economies.

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Britain's Treasury chief George Osborne speaks at a Institute of Sydney event during the G20 Fin …

"To secure global economic stability into the future, the United States must support IMF reform now," Hockey said earlier this month in a speech to the Lowy Institute, a Sydney-based foreign policy think tank. "As a longstanding friend of the United States, we can say emphatically that this reform is very much in the interests of the United States as well as that of its friends."

The international lending agency's governing board gave a green-light to the overhaul in 2010, & approval by Congress is the last remaining roadblock for it to take effect. Lew has vowed to obtain the reform approved, saying last month "we will obtain it done."

The G-20 members are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea, Russia, Saudi Arabia, South Africa, Turkey, the U.S. & the European Union.


Associated Press Economics Writer Martin Crutsinger in Washington contributed to this report.

Central BanksPolitics & GovernmentFederal Reserve

Source: “Associated Press”

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