G7 ministers hold US finance talks

World finance ministers have gathered in the US capital, Washington DC, for three days of discussions on the global economic crisis. 

• Ministers from the G7 group of the world’s richest nations met on Friday and issued a statement saying they expected global economic activity to pick up later in 2009.
• “We are right to be somewhat encouraged, but we would be wrong to conclude that we are close to emerging from the darkness that descended on the global economy,” said Timothy Geithner, the US treasury secretary, in a statement.

  The G7 –  Britain, Canada, France, Germany, Italy, Japan and the US – said they were “committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again”.

• The G7 meeting is to be followed by a G20 group meeting, with the International Monetary Fund (IMF) and World Bank also due to meet over the weekend.
• The meetings follow the G20 summit earlier this month, in which world leaders pledged $1trn in stimulus funds and more regulation to combat the worst global economic crisis since the 1930s.
• “We will take whatever actions are necessary to accelerate the return to trend growth (rates) while preserving long-term fiscal sustainability,” the G7 said, apparently referring to concerns that governments are taking on too much debt to pay for economic stimulus programmes.
• They also agreed to continue,”as needed, to restore lending, provide liquidity support, inject capital into financial institutions, protect savings and deposits and address impaired assets”.
• A global financial crisis was sparked after many US homeowners failed to pay back high-interest or subprime mortgages that banks across the world had invested in.

  The meetings come as a joint World Bank/IMF report released on Friday said that up to 90 million more people would suffer extreme poverty this year because of the economic crisis, while the number of “chronically hungry” couldtop one billion.

• Efforts to cut poverty and hunger levels by half between 1990 and 2015 had begun well but were now at risk as overseas markets dry up, and foreign investment and the flow of aid come under pressure.
• His comments follow the release of an IMF report on Wednesday which forecast the global economy would contract 1.3 per cent this year.