Too early to end stimulus: G20 officials
Finance officials from rich and developing countries have pledged to maintain emergency support for their economies until global recovery is assured.
St Andrews: Finance officials from rich and developing countries pledged on Saturday to maintain emergency support for their economies until recovery is assured and committed themselves to urgent action on tackling climate change.
US Treasury Secretary Timothy Geithner said the "process of growth is now beginning" but warned that ending stimulus measures too early would be damaging to the economy.
He said US jobs figures out on Friday showing unemployment at a 26-year high of 10.2 percent "reinforced that this is still a very tough economic environment”.
"If we put the brakes on too quickly, we will weaken the economy and the financial system, unemployment will rise, more businesses will fail, budget deficits will rise, and the ultimate cost of the crisis will be greater," Geithner said.
The statement from Group of 20 finance ministers and central bankers at the end of their meeting in St Andrews, Scotland said that economic and financial conditions have improved.
But they stressed that recovery is "uneven and remains dependent on policy support" and that high unemployment remains a major concern.
The statement smoothes over divisions among officials about how best to secure future global growth. Host country Britain, still mired in recession, wants to continue international effort to support a still fledging recovery, while other G20 nations, including the United States, Japan and Germany, have been more eager to talk about ending measures to boost growth.
The G20 officials — representing around 90 percent of the world`s wealth, 80 percent of world trade, and two-thirds of the world`s population — also committed to take action to tackle the threat of climate change and work towards "an ambitious outcome" at a major UN conference in Copenhagen next month.
Officials are considering a finance package to help poorer nations develop green industries and adapt to climate change.
The issue`s priority on the agenda here reflects concern that nations will fail to agree in Copenhagen on December 6 on a successor to the Kyoto treaty limiting carbon emissions. The EU has said that there should be a EUR 100 billion annual package of public and private finance by 2020 and has urged the US to lay out its position.
But the Obama administration has been preoccupied with prickly domestic issues such as healthcare.
Danish Prime Minister Lars Loekke Rasmussen said earlier Saturday it was now "obvious" that the December climate change talks "can`t achieve the final result in terms of the new legally binding treaty which goes into all details."
But he said finance ministers held the key to a final deal, urging them to come up with concrete proposals on funding to help developing nations tackle and cope with a warming climate.
The climate issue has been the focus of protests around St Andrews. A small group of protesters blocked the coastal road Friday night between the town and the nearby resort where the meeting was held by chaining themselves together. On Saturday, around 200 demonstrators gathered at West Sands beach on Saturday with a group dressed as bankers sticking their heads in the sand.
The finance ministers and central bankers are trying to make good on a pledge by world leaders at their September summit in Pittsburgh to subject their economic policies to the scrutiny of a peer review. That process would determine whether each country`s efforts were "collectively consistent" with sustainable global growth.
The goal is to avoid repeating problems like huge trade deficits and credit-fuelled consumption in the US, and massive trade surpluses and savings in China and elsewhere.
The G20 finance officials committed to setting out national and regional policy frameworks by the end of January. They also said they would conduct the initial phase of its mutual assessment process in April, in time for G20 leaders to consider the results at their next summit in June.
The officials also emphasised the need for quick implementation of banking industry reform, saying that stronger standards should be developed by the end of 2010, with the aim of implementation by the end of 2012 as financial conditions improve.
Earlier on Saturday, British Prime Minister Gordon Brown told finance ministers it was time to consider a global financial levy, such as a tax on transactions or an insurance fee, that could support a "resolution fund" as a buffer against future bailouts.
Brown said banks needed "a better economic and social contract" that reflected their responsibilities to society.
But he said Britain would not act alone in imposing any tax, and that any measures must be implemented by all major financial centres.
The G-20 is comprised of Argentina, Australia, Brazil, Britain, Canada, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the rotating EU presidency.