G-20 leaders make progress on issues

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G-20 leaders make progress on issues

Senior policy makers and central bankers from the world’s 20 most powerful economies took a major step forward last weekend in resolving pressing issues involving the post-crisis economic landscape.

The meeting of economic bigwigs in the port city of Incheon on Saturday and Sunday provided G-20 nations with a chance to share their stances on major issues and come closer - albeit at painstakingly slow pace - to cementing solid agreements later this year. But it also made clear that they have a tough road ahead, as differences in opinion clearly emerged.

According to senior Finance Ministry officials who led the weekend meeting, participants set overall deadlines for major issues, including how to tackle global trade imbalances and unwind loose monetary policies as well as whether to form a financial safety net to protect countries threatened by a sudden liquidity crisis.

Member countries have tentatively agreed to reach some kind of conclusion on a so-called “framework for strong, sustainable and balanced growth” by the start of the November G-20 Summit in Korea.

The framework involves determining how to tackle ever-burgeoning trade deficits in certain countries, most notably the United States, and surpluses in other parts of the world such as China. It also will address how to narrow global developmental gaps, among other issues.

Shin Je-yoon, deputy finance minister of international affairs, said the trade imbalance issue, not surprisingly, spurred “intense debates” among working-level officials during the meeting. The topic is a major source of frustration for the United States and is a reason behind the intense pressure on China to appreciate its currency.

“There have been some disagreements among the developed and developing nations [on this issue],” Shin told reporters yesterday.

Another key issue is how to reform the voting system in the International Monetary Fund and the World Bank, with a particular focus on transferring some voting power held by developed countries to developing countries.

Officials at the meeting reaffirmed a tentative goal to reach a conclusion on the World Bank’s voting structure overhaul by April and by November for the IMF.

“Each country has a slightly different idea of what criteria should be used when transferring voting powers,” said one senior Finance Ministry official who declined to be named.

By Jung Ha-won [hawon@joongang.co.kr]

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