G20 faces balancing act to safeguard recovery

Published by rudy Date posted on June 5, 2010

BUSAN, South Korea: Finance ministers from the world’s biggest economies must balance efforts to shore up a fragile global recovery with the need to slash deficits when a G20 meeting gets underway later Friday.

With the sovereign-debt crisis in Europe forcing countries there to accelerate debt-reduction measures, fears are growing that moves towards tough austerity could hit growth and derail a recovery whose durability is at risk.

“It’s important that we understand just how fragile the recovery is,” Trevor Manuel, minister in the presidency for South Africa and former finance minister, said.

“Economies around the world are raising the specter of a double-dip recession and this presents the opportunity to take decisions to prevent the world from going into a fresh recession,” he added.

Officials are wary of shifting too quickly towards emphasizing deficit cuts over sustaining growth despite the threat of bond markets hammering debt-hit governments, as witnessed recently with Greece’s soaring borrowing costs.

“We shall have to achieve economic recovery, at the same time we cannot give up fiscal prudence,” India’s Finance Minister Pranab Mukherjee told AFP.

“So striking a balance between two apparently contradictory situations is to be achieved. That is the challenge,” he said.

But as ministers started two days of meetings in Busan, South Korea, there were indications that they would struggle to carve out a consensus on how to impose tougher restrictions on the banking sector as viewpoints diverge.

“Further deliberation of this issue” was needed, said Sakong Il, chairman of Seoul’s presidential committee for the G20 summit.

The weekend meeting must “try to make sure leaders (who will meet for the G20 summit in Toronto later this month) can come up with general principles” for banking reform, he said.

Members such as the US whose economies are largely financed by markets want banks to be required to hold more assets on their balance sheets to protect against any future crises.

But policymakers in continental Europe, where banks provide more financing, worry that higher reserve requirements may hit growth.

And a global banking tax is supported by European powers and the United States but resisted by some developing nations plus Canada and Australia, who argue that they should not have to pay to clear up a mess they did not create.

“Our banking system could withstand the trouble which counterparts in Europe and America had to face, mainly because of well-placed regulations,” Mukherjee said.

“Well-placed regulations can achieve the job… we are not in favour of taxing the banks,” he said.

On Wednesday US Treasury Secretary Timothy Geithner sought to prod economic powers towards a set of common financial rules, as he tried to prevent competing national rules from throwing up fresh trade barriers.

Stricter capital rules being devised by Basel regulators have been integral to the G20 agenda after the group emerged as the main forum for handling the global financial meltdown in 2008.

New Basel rules are supposed to be ready by the end of 2010 and the G20 says it aims to implement them by the end of 2012 if the global economy has emerged from the downturn. –AFP

April 2025

World Day for Safety and Health at Work
“Safety and health at work every day!”

Invoke Article 33 of the ILO constitution
against the military junta in Myanmar to carry out the 2021 ILO Commission of Inquiry recommendations against serious violations of Forced Labour and Freedom of Association protocols.
Accept National Unity Government
(NUG) of Myanmar.
Reject Military!
#WearMask #WashHands #Distancing #TakePicturesVideos

Time to support & empower survivors. Time to spark a global conversation. Time for #GenerationEquality to #orangetheworld!

Monthly Observances:

March – Women’s Role in History Month
April – Month of Planet Earth

Weekly Observances:
Last Week of March: Protection and Gender Fair Treatment of the Girl Child Week
Last Week of April – World Immunization Week

Daily Observances:
Mar 25 – International Day of Remembrance of the Victims of Slavery and the Transallantic Slave Trade
Mar 27– Earth Hour
Apr 21 – Civil Service Day
Apr 22 – World Earth Day
Apr 28 – World Day for Safety and Health at Work

Trade Union Solidarity Campaigns

No to Trafficking

Jobs! Jobs! Jobs!

Categories