G20 ministers mull global recovery, climate funding

by Guy Jackson ST ANDREWS (AFP) --

G20 finance ministers were meeting here on Friday to shore up the recovery from the global financial crisis and discuss funding for a still uncertain agreement on climate change.

The ministers from the world's 20 most powerful and fastest emerging economies are holding the third in a series of meetings this year which led to a one-trillion-dollar fiscal stimulus package to tackle the recession.

Over two days in the picturesque Scottish coastal town of St Andrews, they are seeking to flesh out agreements made at a leaders' summit in Pittsburgh in September.

Now that the United States, Japan, Germany and France have emerged from recession after last year's global financial crisis, the G20's focus has switched from disaster management to building a secure economic future.

Chancellor Alistair Darling said ahead of the meeting that ministers agreed it was too early to withdraw massive economic support packages while the global recovery remained fragile.

"At the G20 (in Pittsburgh) we agreed that it would be a real mistake to withdraw the stimulus packages before their work was done," Darling said in an interview with European newspapers.

"But at the same time, we also agreed that some measures would be withdrawn at different times. We mustn't withdraw everything at once."

Despite the signs of recovery, coordinated action was still required, Darling added, as Britain suffers its longest recession on record.

"If we do not act, there is a risk that we will be confronted by a decade of weak growth and low employment," he said.

The rockiness in the economy was underlined this week when Downing Street said it was pumping in an extra 30 billion pounds into Royal Bank of Scotland (RBS) and Lloyds Banking Group PLC (ADR) (Public, NYSE:LYG).

RBS, which is now 84-percent state-owned, said that despite massive aid over the past year to prevent it from collapse it made a net quarterly loss of 1.8 billion pounds and expected recovery to be slow.

The St Andrews meeting will work out details of the so-called global framework for growth agreed in Pittsburgh, designed to prevent a repetition of last year's crisis which has cost millions of jobs worldwide.

Meanwhile, France says it wants to see genuine signs of progress on curbs on bankers' bonuses after the leaders agreed in Pittsburgh to move towards a system of spreading them over a longer period with the possibility of clawing back the payments if they under-perform.

Finance Minister Christine Lagarde told BBC radio: "I would hope that a little bit more can be done, to actually cast in stone the fact that we want to stop excesses, stop abuses, and bonuses that are strictly risk incentives."

Banks' bonus policies which encouraged excessive risk taking have been blamed by many observers for fuelling last year's instability in financial markets.

With just weeks to go before December's UN-led conference in Copenhagen on finding a new agreement on curbing greenhouse gases, the ministers will also focus on how cash from rich countries to help developing nations tackle the issue should be delivered.

Amid signs that the prospects for a hoped-for binding deal in Copenhagen are fading, Darling urged ministers to make progress on the financial details of an agreement.

He said: "We either take action and stop those problems happening or we fail to take action and we face bigger costs down the line.

"My message to my fellow finance ministers is there's a job of work to be done here. I don't think anyone seriously denies there's a problem here. Let's get on with it."

Demonstrations are being organised to coincide with the weekend meeting.

A coalition of anti-war campaigners and student groups intend to rally in St Andrews on Saturday and a "people's G20" will be held on the beach near the hotel where the ministers are meeting.


Copyright © 2009 AFP All Rights Reserved

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Published: Friday 06th of November 2009 03:00:37 PM
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