G20 hopes grow for U.S. deal to avert default

By Lidia Kelly and Krista Hughes

WASHINGTON (Reuters) – Finance officials from the world’s biggest economies looked set on Friday to urge U.S. lawmakers not to delay in striking a deal that would ensure the United States can keep paying its bills.

Officials from across the Group of 20 nations, meeting in Washington Friday, had warned that a failure by the U.S. Congress to raise the nation’s $16.7 trillion debt ceiling would wreak havoc on the global economy.

French Finance Minister Pierre Moscovici confirmed that officials have included a sentence about the U.S. fiscal situation in the communique to be delivered Friday after they conclude their meeting here.

Anton Siluanov, finance minister of this year’s G20 host Russia, characterized the reference as a “general wish for a fast solution of the problem.”

“There will be a couple of propositions – that we are of course concerned and that we wish for a speedy resolution of the situation,” Siluanov said.

The risk of a default receded on Thursday as Republicans presented a plan to extend the nation’s borrowing authority, opening a door for talks with the White House.

Republicans have sought to use the debt limit as leverage to force the White House to agree on budget cuts or to changes in Obama’s signature health care law.

Complicating the negotiations, though, is a partial government shutdown that moved into its eleventh day on Friday. President Barack Obama was expected to press his case for a quick reopening along with an increase in the borrowing limit when he meets with Senate Republicans on Friday.

U.S. Treasury Secretary Jack Lew and Federal Reserve Chairman Ben Bernanke had expressed their belief to their G20 counterparts at a dinner on Thursday that a resolution would be reached, Siluanov said.

But Lew did not predict the timing of a deal and said it would be a bumpy, noisy path, a Treasury official said.

Major U.S. stock indexes posted their strongest rally in more than nine months on Thursday after signs of progress in negotiations to raise the U.S. debt limit, leaving the S&P 500 less than 2 percent away from its record closing high.

“It is quite clear that America has been pulled back from the brink, as sensible people expected,” Australian Treasurer Joe Hockey told reporters ahead of the Thursday dinner of top finance officials from the G20 developed and emerging economies.

“This is an important step forward,” he said.

After a second round of talks on Friday, the G20 was due to issue a communique offering its views on the world economy and steps that could be taken to strengthen it.

Siluanov said that the statement would be just two pages, with most of the phrasing taken from a document adopted by G20 leaders at a summit in St. Petersburg in September.

“Very little time has passed since,” he said.

There was considerable debate about the proper language needed to address the U.S. fiscal standoff, a G20 official who participated in the drafting said, noting that the group was wary of sounding like it was meddling in U.S. domestic politics.

Another official said the nod would be about “concern and call for a speedy resolution.”

Officials from around the world had expressed confidence the United States would break through the political logjam that had already led to a partial shutdown of the U.S. government.

The risk of a U.S. default, which G20 officials had always considered remote but which had appeared on the rise in recent days, had clouded an already soft outlook for the world economy.

The IMF this week cut its forecasts for global growth, saying an expected pickup in rich nations, including the United States, would likely not be enough to offset slower growth in emerging markets. It warned that forecast would be thrown off badly were the United States to default.

Some of the sternest warnings to Washington came from the biggest holders of U.S. government debt.

“They should have the wisdom to solve this problem as soon as possible,” said Yi Gang, the No. 2 at China’s central bank.

China is the United States’ top foreign creditor with more than $1.2 trillion of U.S. Treasuries; Japan is a close second.

“The problem needs to be cleared quickly because the United States is in a position where it is pulling the rest of the world economy,” said Bank of Japan Governor Haruhiko Kuroda.

(Reporting by Reuters’ IMF reporting team; Writing by Steven C. Johnson; Editing by Chizu Nomiyama and Andrea Ricci)

Source: http://news.yahoo.com/g20-hopes-grow-u-deal-avert-default-154710061–business.html
Tags: djokovic   Becky G   jeff bezos  


Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s