WASHINGTON: Finance officials from the world's top economic powers pledged Friday to move swiftly on efforts to lift nations out of the worst recession since the 1930s.
The major goal: Get banks in every country to start lending again.
Meeting three weeks after an economic summit of world leaders in London, the finance ministers did not put forward any sweeping new proposals but stressed the need for individual countries to carry through on commitments.
Treasury Secretary Timothy Geithner and his counterparts from the world's top seven industrialized democracies, promised in a joint statement to provide the necessary fiscal tonic - tax cuts or increased government spending - to turn around their own troubled economies.
Fixing financial institutions in the U.S. and worldwide and jump-starting lending must be done before the global economy can rebound.
"We are committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again," the finance officials said.
"We will take whatever actions are necessary" to bring that about, they said.
The task at hand is for individual countries to fulfill their pledges and for financial officials to keep up the pressure on each other so that momentum is not lost.
"Implementation is the priority," said French Finance Minister Christine Lagarde. Besides the United States, other Group of Seven participants are Japan, Germany, France, Britain, Italy and Canada.
Officials, however, didn't win new financial commitments to raise $500 billion for an emergency lending facility at the International Monetary Fund, the world's financial firefighter.
That goal was set by G-20 leaders at their London summit on April 2.
Takehiko Nakao, a senior official with the Japanese finance ministry, said countries would meet again soon, with the hope of coming up with the needed money before the end of June.
Obama this week asked Congress to put up $100 billion. Europe and Japan have pledged equivalent amounts.
But other major countries, including China, Russia and Saudi Arabia, have not come forward yet with their commitments.
But that could be hindered because China and other big developing countries like India want to link such financial support to making progress on their long-sought goal for a bigger voice in the operation of institutions like the IMF.
Another option, though, was being explored by the IMF.
The fund is considering its first bond offering, which would provide the IMF with another way to raise money.
China, Brazil, Russia and India are interested.
Discussing the global recession, officials said there were some signs that the free-fall may be letting up.
"Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," they said in the joint statement.
"Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist."
Geithner warned that although there are reasons to be encouraged, "we would be wrong to conclude that we are close to emerging from the darkness."
Even with expected improvements, the IMF predicts the global economy will shrink this year.
That's never happened in the post World War II period.
The stakes are high: Fallout from the global recession has not only propelled unemployment around the world but also has pushed millions more into poverty, hunger and homelessness.
A cascading number of banks have failed.
Skittish companies, with sales and profits falling, have cut back sharply, leading to the loss of 5.1 million jobs in the United States alone since the downturn began.
Obama is counting on his $787 billion recovery package, which includes tax cuts and spending on big public works projects, to help ease the U.S. recession, which has dragged on since December 2007, and to create or save jobs.
The IMF earlier this week called on called on world governments to boost stimulus spending, especially on infrastructure projects likes roads and bridges, which would help create jobs and offer a longer-lasting tonic for economies that won't get back to normal any time soon.
European nations, wary of running up huge budget deficits, have resisted U.S. pleas to ramp up such stimulus spending.
"We are in a bind, if you will," said France's Lagarde.
"On the one hand we have to inject public money into the economy because we believe this is the strongest and best multiplier. At the same time, in the medium and long term, we need to restore the sustainability of public finance.
On the banking front, Geithner said no country expressed concern about how the United States had conducted "stress tests" of its 19 largest banks.
The test will help regulators determine whether banks have sufficient capital to weather another economic shock.
The U.S. also has plans to get dodgy mortgages and other toxic assets off banks' balance sheets, which would put the banks in a better position to lend.
Dominique Strauss-Kahn, head of the IMF, urged countries to move more quickly on such bank cleansing plans, which he said was key to stabilizing the banking system and turning around the world economy.
German Deputy Finance Minister Joerg Asmussen, who represented Germany, welcomed the G-7's call for countries to resist the tempetation of imposing new trade barriers.
"For us as an export country, it is very important and therefore we are satisfied," he said. - AP
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