Indonesia backs G20 growth target, says developing nations need to do more

  • Economy
  • Saturday, 22 Feb 2014

SYDNEY: Developing countries need to do more themselves to offset the impacts of the U.S. Federal Reserve's tapering, Indonesia's finance minister said on Saturday, endorsing Australian-led plans for the Group of 20 to agree an ambitious target for global growth.

The comments from Chatib Basri appeared to be an effort to build bridges between advanced nations and emerging economies over the issues during the meeting of Group of 20 finance ministers and central bankers in Sydney.

"I have to admit that emerging markets should do their own homework," Basri said in an interview with Reuters.

"For example, in the case of Indonesia, we can't put the blame only on tapering itself. We have also got a problem with the current account deficit."

Basri said host country Australia's push to agree a specific target for global growth would help counter the impact of the windback of Fed stimulus, blamed by some countries and investors for an exodus of capital from emerging markets in January.

Indonesia had already started its homework by adjusting oil prices and hiking interest rates, he said.

Emerging nations needed to speed up structural reform to boost foreign investment and long-term private funds in key areas such as infrastructure, he said.

"This is really the link between developed countries and emerging markets, how to channel this money from developed countries to emerging markets through infrastructure development," Basri said.

The finance ministers and central bankers are discussing investment and infrastructure over a working dinner on Saturday.

The B20 -- a grouping of business leaders of G20 nations that is taking part in the infrastructure discussions -- said the private sector was a key driver of economic growth and would be needed to unlock the infrastructure opportunity.

The B20 has estimated that at least $57 trillion will be needed to finance infrastructure projects worldwide through 2030 to meet the demands of global economic growth.

"Around the world, there is no shortage of funds available for investment, but significant infrastructure needs persist," Richard Goyder, chief executive of Australian retail giant Wesfarmers and president of the B20, said on Friday.

"The key challenge is getting policy settings and regulatory environments right so that they enable investment and create new opportunities."

Basri said while the tapering was announced in mid-2013, it was not fully understood until it took effect in January.

"This created a panic in the market," he said.

He urged the United States and other advanced nations to clearly communicate their policies, echoing Australian Finance Minister Joe Hockey's call for "no surprises".  - Reuters

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