G20 soft pedals on debt consolidation in favour of growth - Russia

MOSCOW Sat Jul 20, 2013 4:53pm IST

Russia's Finance Minister Anton Siluanov (front) participates in the G20 finance ministers and central bank governors' family photo in Moscow, July 20, 2013. REUTERS/Grigory Dukor

Russia's Finance Minister Anton Siluanov (front) participates in the G20 finance ministers and central bank governors' family photo in Moscow, July 20, 2013.

Credit: Reuters/Grigory Dukor

Related Topics

MOSCOW (Reuters) - G20 policymakers have soft-pedalled on goals to cut government debt in favour of a focus on growth and how to exit central bank stimulus with a minimum of turmoil, Russia's finance minister said on Saturday.

The final communique from Group of 20 finance ministers and central bankers addresses fiscal consolidation less strongly than had been expected, with discussion focusing chiefly on spillover effects from the withdrawal of monetary stimulus by developed countries, Russia's Anton Siluanov told Reuters.

"(G20) colleagues have not made the decision to take responsibility to lower the deficits and debts by 2016," Siluanov said on the fringes of the G20 meeting in Moscow. "Some people thought that first you need to ensure economic growth.

"You can of course, expect growth, but it may not come anytime soon and debt will keep piling up," Siluanov said, adding that fiscal consolidation should remain a priority.

"The communique addresses (consolidation) more softly, nonetheless we will raise this issue at the leadership level (in September)."

The G20 did not discuss at length Friday's move by China to start interest rate reforms, but Siluanov and other countries will monitor how the reforms are being implemented.

Beijing removed a floor on the rates banks can charge clients for loans, which should reduce the cost of borrowing for companies and households.

The U.S. and the European Central Bank said during the meeting that their policy of low interest rates will continue, Siluanov said: "The question is about the quantitative easing programme, for how long this process will continue."

SPILLOVER EFFECTS

The spillover effects on developing countries from the withdrawal of quantitative easing policies by developed nations, and the United States in particular, dominated the weekend's discussion.

"There were no arguments but there was discussion," Siluanov said. "Emerging countries are very concerned about the predictability of (those policies), how it will all continue.

"We have agreed that coordination is needed, exchange of information is needed."

The G20 also discussed long-delayed reforms to the International Monetary Fund quota system. The governance reform is languishing as the United States, the IMF's largest shareholder has not given a green light to it.

The Obama administration wants Congress to shift $63 billion from an IMF crisis fund to the IMF's general accounts in order to maintain U.S. power at the international lender and make good on an international commitment made in 2010.

Congressional approval of the IMF funding changes is necessary to complete reforms at the lender that the international community has already agreed including reform of voting shares, known as quotas, to boost the power of emerging economies.

"There is a feeling that the process has stalled," Siluanov said. (Additional reporting by Maya Dyakina. Editing by Mike Peacock)

FILED UNDER:

REUTERS EXCLUSIVE

Reuters Showcase

Documents' Leak

Documents' Leak

India widens oil leaks probe to defence ministry  Full Article 

Jim O’Neill Interview

Jim O’Neill Interview

'India can become world’s fifth-largest economy by decade’s end'  Full Article 

Food Security

Food Security

India will not cut multi-billion dollar food handout programme - PM  Full Article 

Bharti-China Mobile

Bharti-China Mobile

Bharti Airtel, China Mobile to collaborate on 4G  Full Article 

Suzlon Energy

Suzlon Energy

Suzlon expects to turn profitable in fiscal 2016: chairman   Full Article 

Eicher Motors Stake

Eicher Motors Stake

Volvo selling up to $300 mln worth of Eicher shares  Full Article 

Rich List

Rich List

Bill Gates tops Forbes rich list, Michael Jordan joins.  Full Article 

Tough Task

Tough Task

India needs sustained GDP growth of 9-10 percent - Jaitley.  Full Article 

Budget 2015

Budget 2015

Budget announcements and reactions from the industry  Full Coverage 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage