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Tue, Oct 28, 2003 - Page 12 News List

Finance chiefs laud new global growth

ON GOOD COURSE A Group of 20 meeting concluded that the world economy is expanding satisfactorily, but old imbalances may still hamper overall performance


Finance chiefs from rich and poor countries are buoyant about global growth but still worry about imbalances that cast a cloud on prospects, US Secretary of the Treasury John Snow said on Sunday.

At the end of the first day of a two-day session of the Group of 20, Snow said the mood was "upbeat, positive" among finance ministers and central bankers with many foreseeing global expansion at a rate around 3.5 percent to 4 percent for the next few years.

"In every single case, the tenor of the comments was that the world economy is on a pretty good course," Snow said.

Not everything was rosy, though, and "there was reference to the US current account deficit, to the China [currency] peg, to high debt levels in Latin America" as possible threats to expansion, he said.

US budget and trade deficits are at record levels, which has fed a debate led by US manufacturers whether China's decade-old practice of linking its yuan currency to the US dollar is giving it an unfair trade advantage.

Snow met Chinese officials separately to press the US case that China should permit market forces to have greater sway in valuing its currency, in recognition of China's rising status as a trade and political power.

"We reaffirmed our interest in seeing them move in that direction and they reaffirmed their intention to do so," Snow said, declining to answer more questions in view of scheduled testimony to Congress on Thursday on a report that deals with currency practices of China and other trade partners.

The G20 brings together officials from not only rich industrial nations but also emerging-market economies in a forum that gives the poorer countries a chance to express their trade and economic views directly to wealthier participants.

The gathering was to conclude yesterday with a formal communique and press conferences.

It is also an opportunity for bilateral talks on a range of hot-button matters, including the US bid to tighten curbs on terror finances and to raise money for Iraqi reconstruction.

Snow said that, in meetings with finance ministers from Germany and Russia, he found common ground on the US position that the rest of the world needed to pitch in quickly to help Iraq rebuild its ravaged economy.

France, Germany and Russia, which opposed the US-led invasion that toppled former Iraqi president Saddam Hussein's regime, did not pledge money at a donors' conference for Iraq in Madrid last week.

But Snow said Russia and Germany both saw the need for helping Iraq, and cited German Finance Minister Hans Eichel's support for giving Iraq a boost.

Snow said that not only was money needed for Iraq, but donors were being asked to "accelerate pledges" of financial aid for Afghanistan, which has been struggling to achieve stability since the overthrow of the Taliban in 2001.

"They had a sense of urgency as we do and were as co-operative and forward-leaning on that as you could hope for," said Snow, who was scheduled to have a similar discussion on Iraq yesterday with French Finance Minister Francis Mer.

Since the Sept. 11 attacks against US targets in New York and at the Pentagon, the US has been driving for a unified front in crimping terror groups' ability to move funds through the world banking system.

US officials also want more regulation of charities and informal money-exchange systems like the paperless "hawalas" widely used in the Middle East and South Asia.

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