September 30, 2009 / 3:39 PM / in 8 years

Canada says G7 ministers to discuss imbalances

OTTAWA (Reuters) - There is still plenty for the G7 to discuss, Canada’s finance minister said on Wednesday, even though the group of rich nations has been overtaken by the wider G20 as the chief forum for global economic co-operation.

Flaherty said Saturday’s meeting of G7 finance ministers in Istanbul will try to advance the agenda reached at the G20 summit in Pittsburgh to resolve global economic imbalances -- including currency issues -- as well as to reform the International Monetary Fund and ensure countries do not withdraw stimulus measures too soon.

“There’s a lot to talk about, particularly with respect to the IMF ... We’ll spend some time talking about that,” he said, admitting that there had been a “proliferation of meetings.”

The ministers and central bankers are gathering ahead of the IMF’s annual meetings.

The G7’s role as a steering committee for the global economy has been greatly diminished -- and some even suggest the grouping will disappear -- after world leaders agreed at last week’s Pittsburgh summit that the G20 group of rich and developing nations would officially become the main global policy group.

Flaherty said the issue of currencies would also likely arise as part of a broader discussion of global imbalances.

When asked if he would raise the issue of the strong Canadian dollar, he said: “We talk about imbalances, yes.”

The Canadian dollar, like other major currencies, has risen sharply against the U.S. dollar, along with the start of the global recovery and rising commodity prices.

Canada has often complained that its currency bears the brunt of the swings in the U.S. dollar, hurting its economy which relies heavily on exports to the United States.

Resolving imbalances implies a new global growth framework in which countries with large current account surpluses, like China, focus on boosting domestic demand, while deficit nations like the United States undertake policies to increase savings.

Canada has also long supported G7 messages to countries such as China to allow more flexibility in their currencies.

The G20 leaders agreed in Pittsburgh to shift some voting power at the IMF to underrepresented countries such as China from rich ones. Changes in IMF voting power are expected to be decided by early 2011 by the fund’s 186 member countries.

($1=$1.07 Canadian)

Reporting by Louise Egan; editing by Rob Wilson

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