G-8 agree to aim for sustained growth, touch on N. Korea sanctions

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LECCE, Italy, June 13 Kyodo -
Group of Eight finance ministers agreed Saturday to ensure that the signs of
improvement emerging in the global economy are nurtured, holding substantial
discussions on ''exit strategies'' from their current extraordinary policy
measures for the first time since the economic crisis deepened last year.
The ministers also said they are ready to impose new financial sanctions on
North Korea in an ''effective and timely'' manner following its recent nuclear
test.
On macroeconomic conditions, the ministers recognized that the coordinated
policy action implemented so far has borne some fruit, citing a recent rise in
stock prices, a decline in interest rate spreads, and improved business and
consumer confidence.
''There are signs of stabilization in our economies,'' said a joint statement
of the ministers from the G-8 countries -- Britain, Canada, France, Germany,
Italy, Japan, Russia and the United States -- after their two-day meeting in
Lecce, Italy.
''I was left with a strong impression that each country has the feeling that
the economy is bottoming out,'' Japanese Finance Minister Kaoru Yosano said at
a news conference after the meeting.
But the ministers at the same time agreed not to relax their ongoing efforts
until the global economy moves back onto a self-sustained recovery track and
called for vigilance over persisting downside risks such as worsening
employment conditions.
''Even after output growth begins picking up, unemployment may continue to
increase,'' the ministers said, adding that the countries will take all
necessary steps to ease the impact of the crisis on employment.
The ministers said they discussed in the southern Italian city ''appropriate
strategies'' for how to find a way out of big fiscal spending once their
economies recover.
The G-8 countries, however, noted that the framework for unwinding the unusual
measures taken so far to fight the global economic crisis should ''vary from
country to country.''
Yosano said, ''My understanding is that each country is still not considering''
what to do with their fiscal policies ''in concrete terms'' when the economy
makes a real comeback.
Yosano suggested it is too early to place utmost importance on exit strategies,
saying, ''It is now time to think about them, not a period to implement them.''
U.S. Treasury Secretary Timothy Geithner also warned at a separate news
conference after the meeting that nations should not implement policy restraint
too early as the global economy has yet to enter a recovery phase despite
recent signs of improvement.
''I don't think we're at the point yet where we can say we have a recovery in
place,'' he said.
But he echoed the G-8 statement's call for charting the future course for the
restoration of fiscal balances, saying financial and economic recovery ''will
be stronger and more sustainable if we make clear today how we get back to
fiscal sustainability when the storm has finally passed.''
Policymakers have started to weigh the consequences of expanding budget
deficits and continuing government intervention too long in the private sector,
fearing that they could become stumbling blocks for healthy economic growth in
the long run.
To get a better picture of when to reduce the governments' involvement in
economic activity, the G-8 asked the International Monetary Fund to carry out a
study.
In this context, Japan explained to its G-8 partners its new goals to rein in
the country's swelling debt over the next 10 years, such as realizing by the
end of fiscal 2019 a surplus in the primary balance -- revenue matching
spending, excluding debt payments, according to Yosano.
Japan also strongly insisted that reference be made to new financial sanctions
against North Korea following its nuclear test in May, Japanese officials said.
The statement said, ''We are committed to the effective and timely
implementation of financial measures against North Korea as set out, among
other measures'' in the U.N. Security Council resolution, which was adopted
Friday in New York.
Yosano said the G-8 countries all acknowledged the ''great impact'' from North
Korea's second nuclear test on May 25 and there was no controversy regarding
the inclusion of a paragraph on Pyongyang's nuclear ambitions.
The ministers also reaffirmed the importance of combating all forms of money
laundering and the financing of terrorism.
In addition to macroeconomic and North Korean issues, major items on the
meeting agenda were climate change, food security, financial regulation and
strengthening the lending capacity of international organizations to assist
developing countries.
The ministers discussed a set of common principles and standards for
international economic and financial activity.
Italy, which chairs this year's G-8 summit, is interested in formulating a
package of guidelines, now named the Lecce Framework, to prevent a repeat of
the global economic crisis.
The idea is to stipulate what should and should not be done in areas such as
corporate governance and executive pay.
The results of the G-8 finance ministers meeting will serve as important input
for discussion at the July 8-10 summit in the central Italian city of L'Aquila.
The outcome could also have some influence on the course of the next Group of
20 financial summit in Pittsburgh in September, which some think could be the
last meeting of its kind after the first held in Washington in November, when
the global financial crisis deepened, and the second in London in April.
==Kyodo
2009-06-14 00:53:38