Finance chiefs try to reassure markets
IQALUIT, Nunavut – Top finance officials of the seven major industrial countries sought to calm jittery markets by pledging Saturday to keep providing government aid to sustain a fledgling economic rebound.
But officials of the Group of Seven countries meeting in the Canadian Arctic acknowledged their delicate balancing act. They need to revive growth, which means providing more government stimulus.
But such spending has driven deficits to historic highs. And it’s raised fears among investors about whether all that fresh debt can be repaid.
Those worries were underscored in the past week. Investors sent global financial markets into a tailspin over growing concerns about debt levels in Greece.
Investors fear Greece may default or require a bailout from already strapped European governments. Those concerns are spreading to other financially troubled governments such as Portugal and Spain.
All three nations share the euro currency. Their debt burdens have reminded investors of the fragility of the global rebound from the worst recession since the Great Depression.
“The world economy is coming back,” Canadian Finance Minister Jim Flaherty told reporters as the two-day G-7 meeting ended. “We’ve been through together a very difficult time, a very uncertain time and now we see signs of recovery.”
That view was echoed by Flaherty’s colleagues. The group includes U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke. The G-7 countries are the United States, Japan, Germany, France, Britain, Italy and Canada.
The finance ministers pledged to keep government stimulus programs going this year. But none unveiled any new initiatives.
Flaherty had chosen the remote town of Iqaluit, population 7,000, to try to promote more informal discussions. He dubbed them fireside chats.
He said the effort had been a resounding success. Several finance officials took the opportunity to go dog sledding on frozen Frobisher Bay – an experience Geithner and Bernanke passed up.