G7 meeting in Tokyogreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Sunday January 16 10:38 PM ET Rate Pressure to Top G7 Agenda-Camdessus PARIS (Reuters) - Pressure for higher interest rates in the United States and Europe is likely to be the primary topic of discussion at a Group of Seven meeting in Tokyo next week, IMF chief Michel Camdessus said Sunday.
In an interview with France's Europe 1 radio, Camdessus was asked about strong growth in the United States and Europe, where investors expect official interest rates to rise in the coming weeks.
``I can tell you that I will be in Tokyo next Saturday at the meeting of G7 countries and this will probably be the subject we talk about the most,'' he replied.
Last week, the Bank of England raised interest rates a quarter point to cool off Britain's booming economy. the European Central Bank, which meets this week, and the U.S. Federal Reserve, which meets early next month are expected to follow suit.
The G7 group is made up of the world's leading industrial nations: United States, Japan, Germany, France, Britain, Italy and Canada. Finance ministers and central bankers from those countries will attend The Tokyo gathering.
In a wide-ranging interview, Camdessus declined to be specific about when the International Monetary Fund would restore aid to Russia, noting only that it would depend on when the country fulfilled the technical repayment conditions agreed with the fund.
An IMF mission is scheduled to arrive in Russia on Jan. 25 to discuss these issues and meet for the first time with acting President Vladimir Putin.
The fund halted payments from its latest loan last year and says Russia must meet five ``structural benchmarks'' on audits, bankruptcy rules and cash collection before more money can be approved.
On his native nation France, Camdessus questioned whether the country France was moving quickly enough in adapting to the forces of globalization.
``In my view (France is) not moving fast enough and lacks boldness in this area,'' Camdessus said.
``I think that one can maintain the important aspects of the French social and cultural model perfectly well while taking a little more risk in terms of flexibility and decentralization of decision-making.''
He also questioned whether the Socialist government's plans to reduce the workweek to 35 hours in an effort to create jobs would have the desired effect.
``I do not think that it is the best method. I would have preferred that companies, unions and local officials had been given more time to find a common solution.''
Camdessus, who will step down as head of the IMF next month, declined to offer any insights into who his successor might be, although he did say the decision hung on whether to appoint someone with a strong financial background or a candidate with proven political skills.
German Finance State Secretary Caio Koch-Weser is seen as the leading contender to replace Camdessus, but France has reportedly been pushing the candidacy of former Prime Minister Laurent Fabius.
Japan has also pushed its own candidate, former top financial diplomat Eisuke Sakakibara, for a job that has traditionally gone to a European.
Comments: Looks like leadershipo of the IMF is up for grabs at a critical point in time. I suppose OIL will also be high on agenda. US SEc Treas Larry Summers is in Far East now on tour prior to G7 meeting on 1/22/00 - his tour visits Indonesia and other Far East oil producers prior to the G7 meeting.
-- Bill P (firstname.lastname@example.org), January 17, 2000
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WASHINGTON (Reuters) - The United States is tired of being the world's economic locomotive and both Japan and Europe's economies must pick up some of the slack, U.S. Treasury Secretary Lawrence Summers said on Friday.
Setting out his agenda for a meeting of finance ministers and central bankers from the world's major economies next week in Tokyo, Summers said Europe and Japan should take a lesson from the booming U.S. economy and work on boosting their own growth rates to levels hitherto thought unattainable.
``Governments, workers and businesses in Europe and Japan are increasingly recognizing that they do not have to limit themselves to the hope that growth will return to traditional estimates of potential,'' he told the Institute for International Economics think- tank in a speech.
Summers, repeating long-standing criticism of Japan's rigid economic system, said the world's No. 2 economy needed to increase efforts to deregulate and open up its vast markets.
But he made clear there were limits to Japan's ability to spend its way to a lasting economic recovery, and that it was up to monetary policy to make sure recession does not return.
``Over the medium term, Japan faces important fiscal challenges and going forward, there may be increasing limits on the role for fiscal policy as the major source of domestic stimulus,'' he said.
``But...the greatest threat to the economy's long-term fiscal health would be allowing the economy to slip once again into recession. This makes it all the more important that the overall macroeconomic stance continue to be accommodative as growth becomes more firmly established,'' he added.
KEEP IT EASY, AND AIM FOR
Washington, along with the rest of the Group of Seven (G7) major industrial nations, has urged Tokyo to keep its monetary policy stance extremely lax to help the economy emerge from years of decline. They are expected to ask Japan's central bank once again to stick to that commitment at next week's meeting.
But that was not enough, Summers said. Japan also had to continue working on cleaning up its debt-ridden banking sector, making sure that bad loans are disposed of quickly and efficiently, and unsound institutions shut down promptly.
Europe, for its part, had not yet met the conditions needed to realize the full potential from the introduction of the European single currency, the euro. That required reforms to the continent's rigid labor markets, deeper capital markets and more deregulated goods markets, Summers said.
As emerging markets around the world have begun to recover after two years of financial turmoil, the U.S. administration has increasingly turned back its focus on conditions elsewhere in the industrial world and their impact on the U.S. economy, which is weeks away from reaching its longest-ever expansion.
Summers said policymakers both in Japan and in Europe's leading economies needed to aim for more than just trying to avoid recessions. Their partners abroad expected better, and their own people at home deserved more, he said.
``Having achieved a cyclical expansion does not constitute the basis for relaxation,'' Summers told reporters later on Friday. ``The complacency of low expectations is a concern that one has to have in looking at both Europe and Japan.''
He said strong U.S. growth and weak growth elsewhere had contributed to the ballooning U.S. current account deficit. A more sustained recovery in Japan and Europe was critical for reversing ``this skewed pattern of adjustment'', he said.
NO CLEAR AND PRESENT DANGER
Summers highlighted the U.S. external deficit and the country's low savings rate as problems in an otherwise stellar performance, marked by growth rates of more than five percent and the lowest unemployment rate in a generation.
But he added the external deficit did not pose an immediate threat to the U.S. economy as it also reflected the economy's strong growth, accelerating productivity and high investment.
``At the same time, it is obviously important, for our own economy and for the global economy as a whole that the United States move over time to a more balanced external situation, because a more balanced expansion is likely to be a more durable one,'' he said.
On Saturday, Summers was due to leave on a week-long trip to India, Indonesia and Japan, where the G7 officials will meet on Jan. 22. The group contains Britain, Canada, France, Germany, Italy, Japan, and the United States. Reut17:47 01-14-00
-- Bill P (email@example.com), January 17, 2000.
Lucky we have all these contries trying to dictate our policies so we don't have to "think". Grrrrr...
-- Hokie (Hokie_@hotmail.com), January 17, 2000.
Hokie, and we do it to them to don't we? Our leadership acts like there is no option to globalism - total integration of everything. Is that really true or is it simply because those leading the globalism bandwagon prefer access to the entire world for power and money and therefore, need to convince us as such!!!??
-- tt (firstname.lastname@example.org), January 17, 2000.