AFP – Finance chiefs of G20 states on Saturday sought to narrow differences on how to keep budget deficits in check without harming fragile growth as the world economy emerges from slowdown.
The finance ministers and central bank chiefs of the top 20 advanced and emerging economies will seek in their final communique to show unity on the often divisive issue of how to promote growth without harming fiscal situations.
The meeting in Moscow in an exhibition centre outside the Kremlin walls aims to set up the G20 heads of state summit in Saint Petersburg in September, which will be the culmination of Russia’s presidency of the group.
French finance minister Pierre Moscovici told reporters that for the moment the negotiators had not managed to find a consensus on how to square stimulating growth with reducing deficits.
“We must keep to a balanced language on the balance between reducing deficits and (promoting) growth,” he said.
He said that the final communique would not contain a specific numeric target for reducing public debt and deficits, as was the case at the summit in Toronto in 2010.
“The reduction of deficits is a medium term objective. But at the same time the short term priority is growth, growth and growth,” Moscovici added.
The United States made clear ahead of the meeting that the fight against unemployment should be at the centre of the agenda, with US Treasury Secretary Jacob Lew calling on EU states to do more to improve demand and growth.
However some states, in particular Germany, have repeatedly argued over the importance of fiscal prudence and not harming budgets for the sake of stimulus.
The meeting comes amid demands for clarity after the US Federal Reserve said it could begin cutting its quantitative easing programme, which injects some $85bn a month into the economy via bond purchases, later this year and end the programme by mid-2014.
In testimony to Congress this week, the Fed chairman Ben Bernanke stressed that the central bank would only move to taper the programme if the economy appeared strong enough to withstand less support.
Some key nations, fearing that if the US slows down or shuts down completely the flow of money could hurt their own struggling economies, called on US policymakers to be as transparent in their communication on the issue as possible.
“Having visibility is key,” said Russian finance minister Anton Siluanov.
“We need to establish rules for quantitative easing,” he said, saying these regulations should be “transparent and multinational”.
“When it happens, it’s important that communication is adequate and continues to be adequate,” said the Brazilian negotiator at the G20, Carlos Marcio Cozendey.
All G20 governments are acutely aware of the fragility of their recoveries from the global slowdown.
The International Monetary Fund earlier this month cut its forecast for global growth, projecting the world’s economy would grow 3.1% in 2013, down from its April estimate of 3.3%.
China and other emerging economic powers now face new risks, it warned, “including the possibility of a longer growth slowdown.”
The economic fragility appears to have helped unite the G20 in a fight against tax avoidance, technically legal schemes which allow multinationals to pay very low tax by registering abroad, as well as illegal tax evasion.
Companies in the spotlight in the last months for using legal, but controversial, methods of booking profits in low-tax countries include US giants Google, Amazon and Starbucks.
The G20 is expected to make a firm commitment to implementing within two years an action plan proposed by the OECD to battle tax avoidance and bring more revenue into their cash-strapped budgets.