US: G-20 talks focus on sustainable global growth

The world’s top finance officials this week plan to develop a peer review process to ensure their economic policies avoid the trade and budget imbalances that contributed to last year’s financial crisis, a Treasury Department official said Tuesday.

Two days of talks in Scotland will seek to establish the types of economic data each country will submit for review by the International Monetary Fund. The officials also will strive to set deadlines that will produce results that can be reviewed by the time President Barack Obama and other leaders of the Group of 20 nations meet next summer, according to the Treasury official who briefed reporters before the talks Friday and Saturday in St. Andrews.

Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke are leading the U.S. delegation. They will meet with their counterparts from the other G-20 nations, which includes the world’s leading industrial countries and emerging economies such as China, Brazil, India and Russia.

Obama and the other G-20 leaders agreed in September in Pittsburgh to subject their economic policies to the scrutiny of a peer review process that would determine whether each country’s individual economic programs were “collectively consistent” with sustainable global growth.

The goal of is to avoid repeating problems like huge trade and budget deficits in the U.S., and massive trade surpluses in China and elsewhere. The flow of cheap credit from China was seen as playing a major role in fueling the U.S. housing boom and subsequent collapse.

The IMF will review the individual country data and submit a report to the G-20 finance ministers. That would ultimately form the basis for discussion when Obama and the other G-20 leaders meet in June in Canada.

It was unclear, however, just how detailed the reports will be given the reluctance of individual nations to face outside pressure to change economic policies.

The G-20 meetings, which will begin with a dinner Friday night and conclude with news conferences on Saturday, also will assess the current state of the global economy and the need to continue providing government stimulus to ensure that fledgling signs of recovery become sustainable, the Treasury official said.

Geithner will provide the group with an update on efforts by the administration to get comprehensive financial reform through Congress as part of a global effort to upgrade rules and oversight that proved inadequate to stop last year’s crisis.

Finance officials also will discuss the progress being made in reforming the IMF and other global finance organizations to give rapidly growing nations such as China a stronger voice in decisions, the Treasury official said.