G20 to continue economic stimulus

Talks in Scotland also fail to bring a unified outcome on climate change financing.

    Geithner and Darling (r) both said after the talks that they supported continued stimulus [AFP]

    "We committed to take action to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen" where countries will seek agreement on slashing greenhouse gas emissions, the communique said.

    "We discussed climate change financing options and recognised the need to increase significantly and urgently the scale and predictability of finance to implement an ambitious international agreement."

    Recovery caution

    However, the grouping, which comprises about 90 per cent of the world's wealth, was not able to decide on how to distribute funds to poorer nations to resolve the issue.

    Wolfgang Schaeuble, the German finance minister, said: "Basically a group of emerging nations made it clear that they were unwilling to invest their own funds in the fight against climate change."

    "We were prepared for that and it was obvious that the industrialised countries would of course bear most of the burden."

    Schaeuble obliquely put blame on rich nations, such as the US, who have not committed to funding the fight against climate change for this situation.

    Regarding the state of the global economy, ministers were cautious on saying that any recovery was gathering pace.

    "We are not out of the woods yet and we need to maintain the measures we have taken," Alistair Darling, finance minister of G20 president Britain, said.

    'Too early'

    Timothy Geithner, the US treasury secretary, said that growth had begun but that financial stimulus should not be halted.

    "If we put the brakes on too quickly, we will weaken the economy and the financial system, unemployment will rise, more businesses will fail, budget deficits will rise, and the ultimate cost of the crisis will be greater," he said.

    "It is too early to start to lean against recovery."

    Figures released on Friday showed the US to have reached a 26-year high in unemployment of 10.2 per cent.

    Geithner said that the economy was still "very tough" and that early growth needed reinforcement to create jobs and encourage business investment that would aid a recovery in the housing market amongst other areas.

    It was not explicitly made clear when stimulus measures would be removed.

    A UK proposal to tax international financial transactions and create a bank for bank bailouts did not receive significant support, including from the US, at the meeting.

    The proposal was said to have been made to protect taxpayers from paying for bailouts. 

    The G20 is comprised of the world's 20 richest nations and emerging economies and represents 80 per cent of the world's trade and two-thirds of the world's population.

    SOURCE: Agencies


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