G20 soft pedals on debt consolidation in favor of growth: Russia

Sat Jul 20, 2013 7:16am EDT
 
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By Lidia Kelly

MOSCOW (Reuters) - G20 policymakers have soft-pedaled on goals to cut government debt in favor of a focus on growth and how to exit central bank stimulus with a minimum of turmoil, Russia's finance minister said on Saturday.

The final communiqué from Group of 20 finance ministers and central bankers addresses fiscal consolidation less strongly than had been expected, with discussion focusing chiefly on spillover effects from the withdrawal of monetary stimulus by developed countries, Russia's Anton Siluanov told Reuters.

"(G20) colleagues have not made the decision to take responsibility to lower the deficits and debts by 2016," Siluanov said on the fringes of the G20 meeting in Moscow. "Some people thought that first you need to ensure economic growth.

"You can of course, expect growth, but it may not come anytime soon and debt will keep piling up," Siluanov said, adding that fiscal consolidation should remain a priority.

"The communiqué addresses (consolidation) more softly, nonetheless we will raise this issue at the leadership level (in September)."

The G20 did not discuss at length Friday's move by China to start interest rate reforms, but Siluanov and other countries will monitor how the reforms are being implemented.

Beijing removed a floor on the rates banks can charge clients for loans, which should reduce the cost of borrowing for companies and households.

The U.S. and the European Central Bank said during the meeting that their policy of low interest rates will continue, Siluanov said: "The question is about the quantitative easing program, for how long this process will continue."   Continued...

 
Russia's Finance Minister Anton Siluanov attends a news conference, part of the G20 finance ministers and central bank governors' meeting, in Moscow, July 19, 2013. REUTERS/Grigory Dukor