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 In a communique after a two-day meeting, G20 finance ministers and
central bankers welcomed brighter economic signs in rich nations,
but lamented weakness in emerging markets.
"Risks to the global economy are more balanced since we last met,"
the finance officials said. "Near-term prospects in advanced
economies, notably the euro area and Japan, have improved recently,
while the U.S. and UK continue to record solid growth, which could
support a stronger global recovery."
Still, the group of developed and emerging market nations, which
represent around 80 percent of global economic output, cited
challenges from an array of sources, including exchange rate
volatility and geopolitical tensions.
Greece was not mentioned by name in the communique and Turkish
Deputy Prime Minister Ali Babacan, speaking on behalf of the G20,
said the issue of Greece did not feature in the formal discussions.
But uncertainty over whether Athens could reach agreement with its
European Union and International Monetary Fund lenders over new
bailout terms in time to meet big upcoming debt payments cast a
cloud over the gathering and other talks on the sidelines of the IMF
and World Bank spring meetings.
"The mood is notably more gloomy than at the last international
gathering," British finance minister George Osborne told reporters.
"It's clear now to me that a misstep or a miscalculation on either
side could easily return European economies to the kind of perilous
situation we saw three to four years ago."
PRESSURE ON ATHENS TO STRIKE DEAL
The new leftist government in Athens must come forward with economic
reforms acceptable to the IMF and EU before bailout funds are
unlocked, but the negotiations have been moving at a crawl.
"It's important that we in the coming days make significant
progress, that the process gains momentum," IMF European Department
Director Poul Thomsen told reporters. "There needs to be a
comprehensive package, and that will clearly take several weeks or
more of discussions."
The United States pressed Athens to commit more fully to discussions
over the nuts-and-bolts of proposed reforms. "Not reaching agreement
would create immediate hardship for Greece, and uncertainties for
Europe and the global economy more broadly," U.S. Treasury Secretary
Jack Lew said in a statement.
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In a sign of the seriousness with which officials are taking the
risk that negotiations founder, the European Central Bank has
analyzed a scenario in which Greece runs out of money and starts
paying civil servants with IOUs, people with knowledge of the
exercise told Reuters.
Jeroen Dijsselbloem, chairman of the euro zone finance ministers
group, warned that Greece and the euro zone should not try to see
who could hold out longer in negotiations.
"Let's not go into a game of chicken to see who can stick it out
longer. We have a joint interest to reach an agreement quickly,"
Dijsselbloem said.
But he acknowledged it would take at least a couple more weeks to
come to an agreement between Athens and the euro zone, possibly in
time for the May 11 meeting of euro zone finance ministers and just
a day before Greece has to make a large loan repayment.
Concerns about Greece contributed to big stock price declines in
Europe and on Wall Street, with the Dow Jones industrial average
closing down about 279 points, or 1.5 percent.
BRACING FOR FED ACTION
While the G20 sounded guardedly optimistic on the global economy, it
pointed to a risk of financial volatility as the U.S. Federal
Reserve prepares to raise interest rates.
"In an environment of diverging monetary policy settings and rising
financial market volatility, policy settings should be carefully
calibrated and clearly communicated to minimize negative
spillovers," the communique said.
The main worry centers on emerging markets, which have been beset by
capital outflows as investors placed bets on higher U.S. interest
rates. The G20 said nations could protect themselves if needed by
taking steps to curb sharp capital movements.
(Additional reporting by Reuters' G20 reporting team; Writing by Tim
Ahmann; Editing by Andrea Ricci and Paul Simao)
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