G-20 finance ministers agree to maintain fiscal support

In a communique at the end of the two-day conclave at St Andrews in Scotland the G20 ministers said: “The recovery is uneven and remains dependent on policy support. High unemployment is a major concern. ”

“To restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured.” The communique said they wanted an “ambitious outcome” at December’s UN climate change summit in Copenhagen, but there was no agreement on a climate finance figure.

“We committed to take action to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen,” the Communique said.

However, no agreement was made on financing options, nor on how much individual countries would contribute. Britain’s Chancellor of Exchequer Alistair Darling admitted that
“while there are signs of improvement, we are not out of the woods yet.”

“Although work is being done on the exit strategy, there is no one that believes the job is yet done.”  

Risks stay

The US Treasury Secretary Tim Geithner said most of the “financial fire” had now been put out, and the global economy was forecast to grow by 3 per cent next year. He said, however, risks remained.

“This is still a very tough economy. If we put the brakes on too quickly the costs will be greater,” he said. The International Monetary Fund said emergency stimulus measures needed to remain to avoid endangering a “nascent” financial recovery.

“An overarching risk is that the recovery stalls” owing to early exits from record-low interest rates and massive state cash injections, the IMF said in a report at the summit.
New initiative

In an unprecedented move, the finance ministers agreed to put forward their economic growth plans to be assessed by the G-20, with assistance from the International Monetary Fund and the World Bank.

Plans would be evaluated to see whether individual countries were working in line with global objectives for sustainable and balanced growth of the G-20 leaders’ summit in Pittsburgh at the end of September.

Darling said, “We agreed to put in place mechanisms to monitor what is happening in other parts of the world. The IMF will look for problems that may be developing which could be headed off.”

“This is a new approach to economic co-operation and a major step. We have agreed to take dramatic action to ensure we have growth in the future. St Andrews was the third and final meeting of the G20 finance ministers, and will form the agenda for the G20 in 2010.”