ISTANBUL: The world’s top 20 economies on Tuesday agreed to take steps to promote global growth but struggled to overcome rifts over the most suitable tools to use and how best to overcome the Greek debt crisis.

G20 finance ministers and central bank chiefs meeting in Istanbul said that growth in the global economy remains “uneven” and the recovery “slow”, especially in the eurozone and Japan as well as some emerging market economies.

They also warned of the risk of “persistent stagnation” in some leading economies due to “prolonged low inflation alongside sluggish growth”.

“We are determined to overcome these challenges” to deliver sustainable growth that can create jobs and encourage inclusiveness, a key target of the Turkish G20 presidency, they vowed in their draft communiqué.

The G20 states said the recent sharp decline in oil prices will provide “some boost” to global growth and should allow states to “reassess” fiscal policies to sustain economic activity.

It said that fiscal policy “has an essential role” in building confidence and sustaining domestic demand, in a prod to some states to drop their insistence on austerity.

However there were indications of tensions that some states — notably fiscal hawk Germany — were unwilling to relax fiscal policy enough to boost demand.

A senior US treasury official, who asked not to be named, said Washington wanted to see countries use all the tools at their disposal — including fiscal policy — to boost growth.

The official said that the current strong performance of the US economy was positive and it would be good to see similar growth levels in other areas like the eurozone and Japan.

The G20 communiqué said that while the sharp oil price falls will provide some boost to global growth, the implications will be different for oil exporting and oil importing countries.

The outlook for oil prices remains “uncertain”, it added.

“We will continue to closely monitor developments in commodity markets and their impact on the global economy.”

Tensions on Greek debt

The statement did not specifically mention Greece, which is not a member of the G20. But the Greek debt crisis has been at the centre of all bilateral talks in Istanbul ahead of a crunch meeting of eurozone finance ministers this week.

Greece faces a growing risk of a “miscalculation or misstep” that could spark a “very bad outcome” to the nation’s debt crisis, British Finance Minister George Osborne warned on Tuesday in an interview with Bloomberg television in Istanbul.

German Finance Minister Wolfgang Schaeuble said earlier that Greece needs to agree a full programme with its creditors if it wants to secure European financial help for its debt crisis, keeping up Berlin’s tough line. “I still don’t understand how they (Greece) want to do it,” he said.

But the senior US treasury official appeared to suggest that Greece should be allowed some leeway, calling for a practical solution that would not cause instability either in Greece or Europe.

Published in Dawn February 11th , 2015

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