WASHINGTON, Sept 28: US Treasury Secretary Paul O’Neill said on Saturday that G7 finance ministers made progress in devising a new method of dealing with debt crises, but said sound policies were a better solution.
In prepared remarks before speaking to reporters about the Group of Seven finance ministers’ session that took place a day earlier, O’Neill said the communique late on Friday “accurately describes our view of global economic growth.”
It said global growth had moderated from earlier in the year and said “risks remain” but that wealthy nations were following policies that should support sustained expansion.
At a news conference, O’Neill repeated a familiar line that he would like to see Japan, with the world’s second largest economy, growing more rapidly. But he was responding to a reporter’s question and gave no indication whether he had pressed his counterpart, Japanese Finance Minister Masajuro Shiokawa, to make any specific policy moves.
O’Neill and Shiokawa had a separate bilateral meeting on Friday at which the US Treasury chief said they had discussed a Japanese proposal for possibly using public funds to bolster Japan’s ailing banking system.
But O’Neill indicated the discussion was too brief for him to fully understand how the Japanese policy initiative would help the country out of a decade-long slump in growth.
A key topic for the Friday ministers’ session was the issue of setting a process for helping emerging-market countries identify and resolve financial crises early.
“The lack of any predictable process for resolving debt crises exacerbates the depth and duration of the difficulties,” O’Neill said on Saturday, so setting out a new procedure should help troubled countries get back onto a firm growth path more quickly.
O’Neill noted, though, that “a country’s own policies determine its economic destiny” — a clear warning that political leaders in countries at risk need to take action to help themselves.
He said the US was committed to meet all its pledges for debt relief through the Highly Indebted Poor Countries initiative but added “debt relief alone is no guarantor of future success.”—Reuters