World Bank meet: G20 agenda should add development - WB
Last modified: 2010-06-04 03:04:57
BUSAN, South Korea (AP) -- The Group of 20 leading economies faced demands Friday to do more for the developing world as their finance chiefs gathered to work on an agenda aimed at fending off future crises.
The talks in this southern port city by U.S. Treasury Secretary Timothy Geithner and other top finance ministers focus on setting an agenda for a summit in Toronto later this month -- and years beyond.
The leaders face myriad demands as they search for consensus on how to reshape the global financial system and avert a "double dip" back into recession due to the European sovereign debt crisis.
"The G-20 needs the rest of the developing world for reasons of self-interest," Ngozi Okonjo-Iweala, a World Bank managing director, said at a conference Friday on the sidelines of the G-20 meeting.
She noted that growth in developing countries is forecast to average 6 percent this year -- twice the rate for rich countries.
"G20 countries need new sources of demand. The developing world has the potential, and it has the people," she said. "The G20 must recognize this and give development the central place it deserves in its agenda."
Managing the European debt fiasco and resulting market turmoil has recently overshadowed longer term efforts to reform banking regulation and set up financial safety nets for countries emerging from crisis.
"This crisis presents a new threat to the global economy. Just when we thought we have turned the corner, there are new clouds on the horizon," said Okonjo-Iweala.
U.S. Treasury Secretary Timothy Geithner on Thursday praised the steps Europe is taking to deal with the crisis but said the challenge was in the execution.
"They have laid out a very strong program and they are starting to put that in place and it is starting to get a little more traction," Geithner said in an interview with CNBC while en route to Busan.
The G-20, founded in 1999, evolved into a global crisis management forum with the 2008 collapse of U.S. investment bank Lehman Brothers and the resulting turmoil in financial markets. It now needs to set an agenda that will promote sustainable long-term global growth, said Asian Development Bank chief economist Jong-Wha Lee.
He and other speakers said the big economies can generate jobs by channeling investment into filling the gaping need for better infrastructure in developing countries, while also ensuring they rebalance growth at home to help make capital more affordable for crucial productive uses.
Justin Lin Yifu, a World Bank chief economist and vice president, said private companies, wary of risks, need support to pursue opportunities in Africa and elsewhere in the developing world.
Recovering funds stolen through corruption, providing aid for trade and greater market access for poor countries to sell their goods and services in richer countries are other key priorities, the experts said.
South Korea, which emerged from poverty to become a technology and industrial powerhouse, assumed the rotating G-20 chair this year and will convene a summit in November in its capital, Seoul. It favors including development in the G-20 agenda.
The finance ministers, who last met in Washington in April, are looking to shore up confidence in financial markets and in a nearly $1 trillion bailout plan for ailing European economies, hoping to stave off any wider damage to the world economic recovery.
They are preparing a communique to be issued Saturday at the conclusion of their meeting.
Not all agree with the idea of having the G-20 manage global development. Some worry that expanding its agenda further will make it less effective.
"We don't want an organization whose agenda is too big to succeed," said Ifzal Ali, chief economist of the Islamic Development Bank.
Agreement also is far from certain on proposals for a bank tax, for setting new standards on how much capital banks need to protect against a future financial crisis and erecting "financial safety nets" to help emerging economies vulnerable to financial flows.
The U.S. and Europe favor a bank tax to pay for future bailouts, but others such as Canada and Australia oppose it given that their banks weathered the global crisis intact.
Geithner declined to say if the U.S. wants the G-20 to adopt a global target of 12 percent of an institution's assets being held as a capital reserve -- one option being considered. That would represent an increase from a current U.S. target of around 8 percent.
"We want to find a balance between making sure that these firms run with much more conservative, much stronger cushions against loss in future crises," he said, refusing to say what target was being considered.
Elaine Kurtenbach, AP Business Writer, Friday June 4, 2010
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