G-7 finance ministers: Argentina on right track, but needs to do more

Saturday, February 9th 2002, 12:00 am
By: News On 6

OTTAWA (AP) _ Economic prospects have brightened for the world's industrial powers, but further steps are needed for a sustained recovery from the global recession, finance ministers from the so-called G-7 said Saturday.

Concluding their first meeting of 2002, the ministers from major industrialized nations and central bank governors called for more global cooperation to combat terrorist financing.

They also praised reforms announced by Argentina and called for the South American country to work closely with the International Monetary Fund on further changes needed to end an economic crisis that has resulted in rioting and political instability.

Argentina will reopen its banks and foreign exchange markets for the first time in two months Monday and free its peso currency from a fixed rate against the U.S. dollar. President Eduardo Duhalde unveiled broad spending cuts on Friday.

Those measures are intended to persuade the IMF to approve new loans that could total $25 billion, but Canadian Finance Minister Paul Martin, the meeting's host, said it was up to Argentina to take the steps required to bring economic sustainability.

``The main responsibility must remain with Argentina itself, as it does with every other country,'' Martin said.

In their final statement, the officials from the United States, Canada, Britain, France, Germany, Italy and Japan endorsed Russia's quick membership in the World Trade Organization and welcomed economic growth and reforms there.

They also noted Russia's help in combatting terrorist financing, and announced more than $100 million in terrorist assets had been frozen or seized since the Sept. 11 attacks on the United States.

U.S. Treasury Secretary Paul O'Neill said the G-7 and the rest of the world needed ``to raise the bar and expectations in what it is we expect to accomplish'' in blocking terrorist financing.

While the G-7 statement said prospects ``have generally strengthened for resumed expansion in our economies,'' Bank of Canada Governor David Dodge noted Japan's finance minister and central bank governor ``were not as optimistic as we are in North America for growth in 2002.''

Finance Minister Masajuro Shiokawa and Bank of Japan Governor Masaru Hayami assured the meeting they were taking steps to deal with recession in the world's second-largest economy and problems in the banking sector, Dodge said.

Outside the secluded Meech Lake, Quebec, meeting site Saturday, a few dozen protesters crossed the ice to try to approach the government retreat where the talks took place. Police turned them away, and no one was arrested.

As Martin and O'Neill held a final news conference, about two dozen protesters chanted anti-IMF and anti-G-7 slogans while standing with their arms locked outside the downtown Ottawa conference center.

The protesters blame the IMF for precipitating the Argentine crisis. In December, the IMF halted new loans to Argentina, and the government subsequently defaulted on the country's $141 billion foreign debt. Former president Fernando de la Rua's administration imposed the banking freeze Dec. 1 to stymie a run on banks that saw $2 billion yanked from the teetering financial system in a single day.