G20 finance ministers hailed on Friday a better-than-expected economic recovery and said it was time for plans to unwind measures to tackle the waning global crisis.
The ministers remained split, however, over support of a global bank tax, Canadian Finance Minister Jim Flaherty said after a meeting of counterparts from 20 leading developed and developing countries in Washington.
“The global recovery has progressed better than previously anticipated largely due to the G20’s unprecedented and concerted policy effort,” a statement released after the meeting said.
“We should all elaborate credible exit strategies from extraordinary macroeconomic and financial support measures that are tailored to individual country circumstances,” it said.
“There was not agreement on a global bank tax,” Flaherty said when asked at a subsequent press conference about issues on which ministers differed. “Some countries are in favor of that, some countries quite clearly are not.”
The G20 ministers asked the IMF, which hosted the meeting, to draft additional proposals for bank taxes to help stem excessive risk taking and pay for bank bail-outs that were needed to prevent a financial sector meltdown.
IMF experts are to consider “how the financial sector could make a fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system,” the statement said.
The IMF was set to propose two taxes, one to reimburse governments for the cost of bailing out banks hit by the crisis, and another to dissuade banks from taking excessive risks in the future.
“It’s a basic sense of fairness that we adopt that basic framework,” US Treasury Secretary Tim Geithner told a press briefing.
G20 ministers face tough discussions, however, as opposition to the tax was expressed by countries including Brazil and Canada.
The ministers also discussed how to rebalance the global economy, a task made more complex by growing differences between the recovery in emerging and advanced economies.
Brazil, China and India have emerged from the downturn in much better shape than European, US and Japanese counterparts.
The IMF has predicted that advanced economies will grow just over 3 percent this year, while emerging and developing economies should expand by more than 6 percent.
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