G20 members divided over imbalance indicators
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Finance ministers and central bank governors of the Group of 20 (G20) were divided Friday over how imbalances should be measured, ratcheting down France's previous high expectations.
Four indicators are under discussion at the two-day meeting.
Two indicators measure imbalances within countries: the public deficit and debt, plus the level of private savings.
The remaining two measure external imbalances: the current account balance or trade balance, and foreign currency reserves or real exchange rates.
France urged G20 members to agree on some indicators to evaluate imbalance. Yet opposition emerged, especially from emerging countries.
According to Chinese finance officials, China advocated the application of trade balance rather than the current account balance as one indicator, and wouldn't support the use of real exchange rates and reserves as indicators.
French President Nicolas Sarkozy said he hoped the financial decision-makers wouldn't "get bogged down in endless discussions on these indicators," calling on countries to think more about global cooperation rather than their own national interests.
However, national interests proved to be the hardest lines to cross.
Brazilian Finance Minister Guido Mantega publicly cast doubts on the content of imbalances.
"What we seek here is a balanced growth, so the main issue here is that we still have imbalance, because the advanced countries haven't yet managed to recover from the crisis," Mantega said.
The United States and some developed economies have long blamed China's comparatively low exchange rates for their growing trade imbalances.
But the outspoken Brazilian minister said, "the best measures" for the United States and European countries were to take "official stimulus" to reduce imbalances in the world.
In the press handouts outlining the meeting, France proposed to strengthen coordination and oversight mechanisms, which involve "indicative guidelines," and to establish an initial assessment of the imbalances.
France expected to take several indicators into consideration, including the external current account, public debts and deficits, reserve currencies, private debts and real exchange rates, which was echoed by EU Economic Affairs Commissioner Olli Rehn during the meeting.
Yet no concrete agreement was reached after the first day, and disputes were obvious.
"Those things are still being discussed. We'll discuss further tonight," South African Finance Minister Pravin Gordhan said, hoping that a kind of consensus would be reached before the meeting ended.
But the minister did not think fixing the indicators was what really was at stake. "The important issue is how we return the global economy to a sustainable path, and the indicators are merely there to evaluate what economies are doing and where they are going," Gordhan said.
"The far more important thing is what you do about it at the end of the day," Gordhan told Xinhua.
While refusing to further comment on Russia's vision of better international coordination, Russia's Deputy Finance Minister Dmitry Pankin said whether or not the United States and the UK will continue to insist on using the amount of reserve as an indicator was Russia's greatest concern.
Canadian Finance Minister Jim Flaherty said that except for indicators on public and private debt, negotiations were continuing on other indicators.
By the end of the day, few delegates were willing to predict if a concrete agreement would result from the meeting.
Given these disagreements, French President Sarkozy, who was ambitious at first, struck a more cautious note when welcoming the delegates at the meeting.
"We are cautious to be ambitious. We cannot ignore each country's red lines," he said.
