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To: maceng2 who wrote (172945)	6/15/2002 5:47:57 AM
From: maceng2	Respond to of 436258

Well I can imagine what the conversation is here... news.ft.com [I expect it will be agreed that the standby emergency printing presses will be turned over just to make sure they are operating OK..pb] G7 ministers meet as world economy stutters By Alan Beattie in Halifax Published: June 14 2002 21:25 \| Last Updated: June 14 2002 21:25 The engine of the world economy may be stuttering a little, but the seven men meeting in Canada who will get the blame if it stalls do not seem too perturbed for the moment. The Group of Seven finance ministers gather in Halifax, Nova Scotia, on Saturday ahead of the grand Group of Eight heads of government conference in two weeks' time. The global economy is poised at a critical juncture. The robustness of the US recovery is in question from weak confidence and output data. The dollar, accordingly, is beginning to show signs of the weakness that so many economists have predicted would come. But the G7 central bankers, whose job is short-term macroeconomic management, are absent on this occasion. Hence the tone of the meeting is likely to be business-like, not attention-grabbing. The G7 has less of a tendency to stage semi-public battles over economic policy than it once did; and even the chance to grab credit for media-friendly initiatives is less likely than normal. Paul Martin, the former Canadian finance minister who may have been planning to use the event for one of his publicity-seeking announcements, left office two weeks ago in a flurry of recriminations and frustrated ambition. John Manley, the deputy prime minister who took over the finance brief and will chair this meeting, is inexperienced in the field and is still getting to grips with his bloated portfolio. In one macroeconomic area in which the finance ministers do retain some control, exchange rate policy, recent movements have not been sufficiently dramatic to shift them from the near-consensus (with the exception of the interventionist Japanese) that the markets are generally the best judge of currency levels. Mr Manley signalled this week there would be little deviation from the orthodoxy. "I think that we would want to encourage sound economic policies and let markets determine rates." European officials have made their traditional complaints about the US current account deficit in the run-up to the meeting. But whether - unlike the previous G7 in April - they summon the courage to repeat them during the meeting is a moot point. A senior Canadian official says: "The focus is more likely to be on the medium-term prospects for economies." In particular, John Taylor, international under-secretary at the US Treasury, has indicated that the need for Japanese structural reform to exit its deflationary rut is likely to get another airing. With the G8 summit again focusing on development issues, there is plenty of detailed work for the finance ministers to assess in advance. It appears that an interminable debate is coming to an end over the US proposal to replace about 40 per cent of the World Bank's lending to the world's poorest countries with grants. In a move that might have been predicted a year ago, when the plan was first unveiled to a resolute thumbs-down from European countries, the compromise to be agreed this weekend will split the difference between the two extreme positions - the US and the UK - almost exactly down the middle. An agreement implying a range of 18-21 per cent grants will be agreed. "I think this is a victory for everybody," Mr Taylor said. Ministers will be looking critically at the programme of debt relief for poor countries - the ghost of media-friendly initiatives past - which, as some critics said all along, is now in trouble, threatening not to deliver the sustained exit from indebtedness that it was designed to do. The Jubilee USA Network of debt campaigners has called the initiative "more grief than relief" - and Paul O'Neill, the US treasury secretary, himself expressed concern during his recent tour round Africa with the rock star Bono. One uncertainty is the fate of the education campaign for poor countries that was to have been the focus of Mr Martin's spot in the limelight this summer. The World Bank, with the vigorous support of Oxfam, have identified a $4bn funding gap which any rich country anxious to establish credentials as a friend of the developing world could help to fill. But the senior Canadian official predicts: "This weekend will not be a pledging session," and any spectacular announcements may have to wait until the finance ministers' bosses pick up the G8 baton in two weeks.