G7 to continue stimulus to bolster recovery

 

IQALUIT (Canada): Finance ministers from leading industrialised nations on Saturday vowed to continue epic deficit spending to bolster a fragile global recovery at the end of G7 talks in Canada's far north.

Canada Finance Minister Jim Flaherty told a closing press conference that he and his G7 counterparts "need to continue to deliver the stimulus to which we are mutually committed, and look ahead to exit strategies."

Measures to shore up the global economy have proved costly, and while the world's richest nations have promoted diverging economic and financial policies, the ministers agreed that investing in their economies remained vital in order to avoid backsliding.

"We have to make sure as not to undermine the global recovery," said US Treasury secretary Timothy Geithner.

"We're absolutely committed to maintaining support for our economies until the recovery is firmly established," echoed Alistair Darling, Britain's Chancellor of the Exchequer.

"We achieved a lot in 2009," he said. "The risk of 2010 is the world will forget just how serious the situation was and what more remains to be done."

Concern over soaring public debts, which cast doubt on the recovery and caused market turmoil in recent days, was to top the agenda but ended up being pigeonholed at the talks, which presented no new directions for the G7 industrialised nations.

The state of the public coffers in Spain and Portugal has been causing growing unease, with investors fearing a scenario similar to the budget crisis gripping Greece.

Greece has been placed under unprecedented EU surveillance as it attempts to implement austerity measures to slash its massive debt and a 12.7-per cent public deficit, while Portugal's deficit hit 9.3 per cent last year, its highest since 1974.

European Central Bank chief Jean-Claude Trichet said on Thursday the high deficit and debt in some countries was placing an "additional burden" on monetary policy and undermining the bloc's stability and growth pact.

The G7 nations' combined debt has reached a whopping US$30 trillion (US$1 = RM3.44) amid rabid spending to keep their economies afloat over the last year. - AFP