TOKYO: World finance leaders yesterday endorsed a checklist of policy reforms aimed at pressuring Europe and the United States to tackle debt troubles that threaten to choke off global growth.
To hold each others’ feet to the fire, the nations — meeting under the aegis of the International Monetary Fund — agreed to review progress in six months.
Their 10-page agenda, however, largely summarised previously planned steps, such as deploying a new European Central Bank bond-buying programme and avoiding the US “fiscal cliff” of spending cuts and tax hikes set to take hold early next year.
The checklist and checkup were an acknowledgement of frustration within the IMF and among many emerging market economies over a sluggish and piecemeal policy response to the major risks facing the world economy.
IMF chief Christine Lagarde said nations had narrowed their differences over how to implement policy, seeking to downplay disagreements between the Fund and Germany over how quickly debt-laden countries such as Greece should cut budgets.
“There was no objection to the recommendation that we gave to the membership, which was
A-C-T,” Lagarde said, spelling out the word letter by letter.
“We might not always agree on everything, but I think there is a general consensus that collective action is going to produce results,” she told reporters.
In a communique released after two days of talks, IMF members warned that global economic growth was decelerating and that substantial uncertainties and risks remained. But the IMF’s governing panel, representing the 188 member countries, praised steps that had already been taken, particularly in Europe, to make the world financial system safer, even if they had not yet gone far enough.
“Members all agreed that we are in a better position today than we were six months ago,” said Singapore Deputy Prime Minister Tharman Shanmugaratnam, the chairman of the committee.
Spain’s economy minister, Luis de Guindos, said he felt the mood toward his country lifting too. Spain is under pressure to seek a bailout as it struggles to cope with high government debt and the cost of recapitalising its banks.
“The atmosphere, from International Monetary Fund policymakers or from the private sector, is much more positive than it was before the summer,” de Guindos said.
Euro zone sources said they expected Spain to seek financial aid from the euro zone in November.
“Were moving, we’re taking steps, we’re preparing it,” said a senior official who is directly involved in talks about potential Spanish aid. “Things will crystallise in November.”
Still, finance leaders leave Tokyo with little concrete evidence fresh progress was being made in the world’s debt trouble spots, hamstrung by political considerations.
REUTERS
