- The Washington Times - Saturday, March 14, 2009

HORSHAM, ENGLAND (AP) - Brazil, Russia, India and China _ the major emerging countries at a meeting of international finance officials here _ have called on the United States and Europe to improve information sharing and demanded a bigger role in guiding the International Monetary Fund.

In a joint statement likely to be interpreted as a criticism of the main developed countries, the four said that the U.S. and the euro zone countries “should step up information sharing and policy coordination and work to ensure that macroeconomic policy is more balanced, proactive, coordinated and countercyclical with a view to promoting global economic recovery.”

Developing countries have complained they are being sidelined in talks between finance ministers and central bankers from the Group of 20 nations, which have so far been dominated by divisions between Europe and the United States over how to tackle the economic downturn.

In a communique released ahead of the full G-20 statement, the four countries also called for significantly more resources for the International Monetary Fund which lends to countries in financial trouble and said they wanted more voting weight in the IMF.

“We call for urgent action with regard to voice and representation in the IMF in order that they better reflect their real economic weights,” the quartet said.

U.S. and European officials have agreed on the need to increase funding to the International Monetary Fund so it can help countries in trouble. The 16 nations that use the euro agreed this week to urge governments to double the IMF’s resources to $500 billion and give it a key role overseeing risks to the global economy.

But the G-20, representing countries that account for more than 80 percent of the world economy, are in conflict over over whether to use fiscal stimulus _ big spending packages and tax cuts _ or better regulation to drag the world economy out of its slump.

The run-up to the gathering in a luxury hotel south of the British capital was marked by a trans-Atlantic dispute, with pointed comments from Washington that Europe was not doing enough to match Washington’s $787 billion package of spending and tax cuts.

German Chancellor Angela Merkel kept the battle lines drawn on Saturday after meeting separately with British Prime Minister Gordon Brown, rejecting those calls and saying that action in Berlin, London and other European capitals had barely had time to produce results.

The debate has led many to fear that the gathering of finance chiefs will fail in its task set a common agenda on key issues for a full summit of G-20 heads of state and government on April 2, a major concern as black economic clouds continue to roll in.

The World Bank warned this week that the global economy will shrink this year for the first time since World War II and the United States reported Friday that its trade deficit plunged in January to the lowest level in six years as the economic downturn cut America’s demand for imported goods, dashing hopes of a U.S.-led recovery.

China, meanwhile, has been battered by a plunge in global demand for its goods, with exports falling 25.7 percent in February.

With so much at stake, Britain is trying to act as a broker between European countries and the United States, pushing for a rescue package that includes both that and regulatory reform.

“I think you will find that countries will be agreeing together about what we are going to do in future, both in fiscal and monetary policy and in the regulatory system,” Prime Minister Gordon Brown said in the joint press conference with Merkel.

But that confidence was undermined by Merkel, who pointed out the Germany, which has been criticised for not doing enough last year launched a fiscal stimulus equivalent to 4.2 percent of annual GDP.

“Nothing has actually yet taken effect on the ground,” Merkel told reporters at London’s Downing Street after meeting with Prime Minister Gordon Brown. “If we want to strengthen the effect of such packages we will simply have to implement them first.”

The International Monetary Fund estimates that only Saudi Arabia, Australia, China, Spain and the United States will introduce budget boosts worth 2 percent of gross domestic product this year, the level that U.S. Treasury Secretary Timothy Geithner considers “reasonable.”

European nations claim that increased spending on social welfare and unemployment is a form of stimulus that will support the economy _ and makes the total European Union rescue package higher than the U.S. program.

On the agenda at the gathering near Horsham, some 30 miles (about 50 kilometers) south of London, on Saturday were talks about principles for financial regulation and supervision, restoring credit channels and the reform of the International Monetary Fund.

Complicating matters, China has raised warnings about what Washington’s drive to spend its way out of recession might do to U.S. government debt, which Beijing holds in large quantities. Chinese Premier Wen Jiabao has sent the U.S. a warning not to devalue the dollar _ and China’s estimated $1 trillion in dollar-denominated U.S. government debt _ through reckless spending.


AP business writers Aoife White and Greg Keller in Horsham, England, and AP reporter David Stringer in London contributed to this report.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide