G20 ‘determined’ to lift growth but rifts remain

ISTANBUL (AFP) ― The world’s top 20 economies on Tuesday expressed determination to raise global growth but struggled to overcome divisions over the most suitable methods and how best to resolve the Greek debt crisis.

G20 finance ministers and central bank chiefs meeting in Istanbul acknowledged that global economic growth remained “uneven” and the recovery “slow,” especially in the eurozone and Japan as well as some emerging market economies.

They also warned of the risk of “persistent stagnation” in some leading economies due to “prolonged low inflation alongside sluggish growth.”

“We are determined to overcome these challenges” to deliver sustainable growth that can create jobs and encourage inclusiveness, a key target of the Turkish G20 presidency, they vowed in their final communique.

The G20 states said the recent sharp decline in oil prices will provide “some boost” to global growth and should allow states to “reassess” fiscal policies to sustain economic activity.

It said that fiscal policy “has an essential role” in building confidence and sustaining domestic demand, in a prod to some states to drop their insistence on austerity.

However there were indications of tensions that some states ― notably fiscal hawk Germany ― were unwilling to relax fiscal policy enough to boost demand.

U.S. Treasury Secretary Jacob Lew said Washington wanted to see countries use all the tools at their disposal to boost growth.

“In Europe, there’s a need for more fiscal policy. There’s a demand shortfall,” he told reporters in Istanbul.

Lew added that the United States ― currently enjoying a strong economic performance ― could not alone be responsible for global growth.

“It’s not going to be a good ride for the global economy if the one strong wheel is the United States,” he said.

In line with agreements made during last year’s Australian presidency of the G20, members are seeking to raise global growth by at least 2 percent and create millions of new jobs over the next four years.

IMF managing director Christine Lagarde said “time is of the essence” given the risks of persistent low growth and the high unemployment faced by many states.

The statement did not specifically mention Greece, which is not a member of the G20. But the Greek debt crisis has been at the center of bilateral talks in Istanbul ahead of a key meeting of eurozone finance ministers on Wednesday.

Greece faces a growing risk of a “miscalculation or misstep” that could spark a “very bad outcome” to the nation’s debt crisis, British Finance Minister George Osborne warned in an interview with Bloomberg television in Istanbul.

German Finance Minister Wolfgang Schaeuble disappointed markets by pouring cold water on suggestions that a whole new financing package for Greece was up for discussion.

“We are not negotiating a new program. We already have a program,” he said, adding this existing package had to be discussed before any new program could be considered.

His comments were echoed by EU’s economic and financial affairs commissioner Pierre Moscovici who said talks should take place within the framework of the existing program.

“This program should stay our anchor, our compass, our reference,” Moscovici told AFP.

But Lew called for flexibility, saying a practical solution was needed that would not cause instability either in Greece or Europe.

“There should be a conversation about a pragmatic approach in which the parties can agree on terms that are mutually agreeable,” he said, warning against “casual talk” on the issue.

Amid the onslaught in Iraq and Syria by well-financed Islamic State jihadists, the G20 also committed to “deepen our cooperation” in the fight against terrorism financing.

This would be done by exchanging information and “freezing terrorist assets.”

The communique urged “all countries to speed-up their compliance with the relevant international standards” in this respect.

It said the Financial Action Task Force against money laundering and similar bodies should “put a specific focus on financing of terrorism.”

They should also develop guidelines to improve the transparency of payment systems, in order to lessen the risk they are used for the financing of terrorism and money laundering, it said.

The G20 asked for a report by October on “proposals to strengthen all counter terrorism financing tools.”