G7 chiefs to meet in Istanbul

October 2, 2009

, ISTANBUL, Oct 2 – The finance chiefs of the Group of Seven richest countries meet in Istanbul Saturday in the shadow of the Group of 20, which declared itself a week ago the world\’s top international economic forum.

Meeting on the sidelines of the annual meetings of the International Monetary Fund and the World Bank, the G7 finance ministers and central bank governors were to discuss a raft of objectives agreed at the Pittsburgh summit of the 20 largest rich and developing countries.

"The main topic will be a follow-up on Pittsburgh on what we have to do to fulfil the objectives," a senior US Treasury official told reporters at a briefing this week.

The Istanbul meeting will be the opportunity to discuss "the next steps and the implementation" of the G20 roadmap, which sets out the path for recovery from the worst recession since World War II and future sustained growth.

Though the G20, which includes the G7 and emerging economies such as China and India, now occupies the premier rung of the international ladder, the G7 has not lost its usefulness, he said.

The G7 remains "a valuable format for finance ministers," the Treasury official said, adding that it groups "the largest creditors in the system."

The G7 — Britain, Canada, France, Germany, Italy, Japan and the United States — also are heavyweights in the IMF, and as such are expected to discuss the decision by G20 leaders to reform the 186-nation institution.

At their summit, the G20 also endorsed a shift in IMF quota share, or voting power, of "at least five percent" to emerging market and developing countries, considered under-represented, from the advanced economies, mainly European countries.

They also backed a minimum 3.0 percent increase in voting rights to the developing countries at the IMF\’s sibling institution, the World Bank.

Several G7 nations, including France, oppose a simple transfer of power to the emerging countries, noting that some European countries are also under-represented at the two institutions.

Though the meeting Saturday is of the G7, Russia\’s finance minister also planned to participate.

In a sign of the upheaval in the global financial system, the G7 finance chiefs were still debating late last week whether to publish a final statement after the meeting, the US Treasury official said.

The G7 traditionally issues a final communique on the sidelines of the IMF-World Bank meetings and if they refrain this time, analysts said it could signal a willingness to bow to the newly powerful G20.

At a two-day summit in Pittsburgh that ended last Friday, the G20 pledged to coordinate the pursuit of sustainable, balanced growth after the worst economic crisis in six decades.

Vowing to "reform the global architecture to meet the needs of the 21st century," the rich and emerging powerhouses asked the IMF to help their finance chiefs assess whether individual members\’ policies are consistent with the group\’s global goals.

They also tasked the IMF with preparing a report on options for how the financial sector could help offset burdens of government banking bailouts before their next meeting, planned for Canada next year.

The G7 meeting Saturday will be the first for the new Japanese finance minister, Hirohisa Fujii.

Picked by new Prime Minister Yukio Hatoyama to steer the world\’s number-two economy out of its worst recession in decades, Fujii reportedly denied Monday that he was satisfied with the current strength of the yen, in an attempt to quash a rumour that triggered speculation on the foreign exchange markets.

By contrast, the G7 meeting will be the last for German deputy finance chief Jorg Asmussen, who will attend instead of Finance Minister Peer Steinbrueck.

Both men are Social Democrats and are about to lose their jobs following the legislative elections that shifted power to the right in Germany.

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