Sat, May 30, 2015 page15

• Greek crisis overshadows G7 talks aimed at growth

  AGENDA SETTING: Policymakers listened to economists describe ways to shake off the worldwide downturn, but concern over a Greek debt repayment deadline prevailed

  • Reuters, DRESDEN, Germany
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  The head of the IMF warned that Greece could fall out of the eurozone as it struggled to sort out its debt stand-off, which is adding to concern about the patchiness of global economic recovery.

  The finance ministers of most of the world’s biggest economies met in Germany against the backdrop of Greece’s unresolved crisis, rising oil prices and volatility in financial markets.

  The Japanese minister of finance expressed concerns about a “rough” fall in the value of the yen to its lowest level against the US dollar in more than 12 years, reflecting the contrasting outlooks for some of the world’s big economies.

  

  IMF managing director Christine Lagarde, left, and Bundesbank President Jens Weidmann talk on the sidelines of the G7 meeting in Dresden, Germany, on Thursday.

  Photo: EPA

  Greece was not officially on the agenda of the G7 meeting on Thursday in a former palace in the eastern Germany city of Dresden.

  Policymakers listened to leading economists spell out ways they could finally shake off the effects of the global financial crisis that struck nearly eight years ago.

  However, with a payment deadline looming next week, the Greek crisis was high on the minds of policymakers.

  IMF managing director Christine Lagarde, a key player in the negotiations alongside the EU, warned that the talks could yet fail, forcing Greece into a debt default and an exit from the eurozone.

  Lagarde was quoted as saying by the Frankfurter Allgemeine Zeitung newspaper that a Greek exit from the eurozone was a possibility.

  She said such a step would “not be a walk in the park,” but would “probably not” mean the end of the euro.

  Officials say a Greek default would not be as damaging to financial markets as it would have been a few years ago because most of the debt is now held by eurozone governments. However, it would raise big questions about the risk of other countries also leaving the single currency if they run into trouble in future.

  Washington has warned against complacency, saying few expected the scale of the crisis triggered by the bankruptcy of investment bank Lehman Brothers in 2008.

  G7 sources said officials from the member countries — Germany, the US, Japan, Britain, France, Italy and Canada — were speaking “all the time” about Greece on the sidelines of the Dresden meeting.

  Greece said on Wednesday that it was starting to draft a deal with creditors that would pave the way for fresh aid, but European officials denied that kind of progress had been made.

  A top EU official said on Thursday that talks had to continue day and night, with a Friday deadline approaching for Greece to pay back 300 million euros (US$329 million) to the IMF.

  “Talks ... have progressed more in the last three weeks than in the last three months, but we are not there yet and we have little time to find the necessary agreement.” EU Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said.

  Meeting under the heading “Towards a Dynamic Global Economy,” the G7 finance ministers and central bank heads discussed economic reforms to increase their competitiveness.
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