December 18, 2013
G20 urges US to act quickly to avoid default
Finance officials from the world's biggest economiespressed the United States to head off a potentially devastating default and vowed to proceed carefully when the time comes to normalize monetary policy.
A communique issued at the end of a meeting of Group of 20 finance ministers and central bankers said the United States "needs to take urgent action to address short-term fiscal uncertainties."
The US federal government has been partially shut down since Oct. 1 amid a budget standoff between congressional Republicans and the White House. Republicans also have refused to raise the nation's $16.7 trillion debt ceiling.
Officials from around the globe have warned that failing to raise the cap would wreak havoc on the global economy.
Anton Siluanov, finance minister of this year's G20 chair Russia, said the mention in the group's communique amounts to a "general wish for a fast solution of the problem."
Republicans presented a plan on Thursday to provide a short-term increase in the US debt limit, spurring hopes a deal could soon be reached. The White House and lawmakers were still struggling to work out details.
"Our American colleagues are doing everything possible in order to find a mutual understanding or agreement with the Congress," Siluanov said.
Solving the impasse is crucial for a global economy that the G20, which accounts for 90 percent of world output and two-thirds of its population, said is showing signs of improvement but still facing "downside risks."
Maintaining growth momentum is likely to get even more challenging as central banks begin winding down the monetary stimulus launched during the 2007-2009 global financial crisis.
The prospect of the US Federal Reserve reining in its stimulus by year end spooked world markets earlier this year and plunged some developing countries into turmoil as the gusher of cheap dollars that had poured into their economies dried up.
Echoing the statement from last month's St. Petersburg meeting, the G20 pledged to ensure any monetary policy changes are "carefully calibrated and clearly communicated" and said navigating swings in capital flows would remain a challenge.
Emerging economies, which have slowed sharply in recent years, remain an important driver of global growth, the G20 said.
The International Monetary Fund his week cut its global growth forecast, saying an expected pickup in rich nations would likely not be enough to offset slower emerging market growth.
"There's much more focus here on the challenge in emerging economies than there has been certainly in any of the meetings I have attended in the 3-1/2 years I have been doing this job," said British Finance Minister George Osborne.