G-20 finance ministers meet in U.S to discuss crisis response

The meeting will be preceded by that of the finance ministers and central bank governors of the Group of Seven, which traditionally gather on the eve of International Monetary Fund, or IMF, and World Bank meetings.

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In a speech Wednesday previewing the meetings, US Treasury Secretary Timothy Geithner did not mention once the G7, a longstanding forum of advanced economies: Britain, Canada, France, Germany, Italy, Japan and the United States.

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By contrast, Geithner spoke several times about the G20, a relatively new grouping created 10 years ago, that includes the G7, the European Union, and Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

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Much like the last G7 meeting in Washington in October, the United States, the world’s largest economy and the epicenter of the crisis, struck a collegial tone, avoiding any hint of the economic lessons it had been fond of giving in the past.

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"The rest of the world needs the US economy and financial system to recover in order for it to revive.... Just as importantly, we need the rest of the world to recover if we are to prosper again here at home," Geithner told the Economic Club of Washington.

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"The world economy is going through the most severe crisis in generations. We each face somewhat different challenges and thus are not all in the same boat. But we are all in the same storm," he said, urging countries to work together to combat the crisis.

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"We bear a substantial share of the responsibility for what has happened," he admitted.

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The G20 and G7 meetings come in the context of grim IMF forecasts for a sharp drop in global output.

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The IMF projects the global economy will contract 1.3 percent this year and grow only 1.9 percent in 2010 in its World Economic Outlook report published Wednesday.

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The downturn, Geithner said, spells trouble for smaller developing economies, not just for major economies in the G7 or G-20.

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"During the boom years, we all marveled at how globalization was speeding the pace of economic activity and integration," he said.

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"Now, were learning that, in times of contraction, globalization transmits trouble with enormous speed and force, affecting economies around the world, the relatively strong as well as the more vulnerable."

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Geithner said the G20 and G7 meetings Friday would offer "a good opportunity to follow up" on the decisions of the London summit on April 2.

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The leaders of the G20, whose members produce more than 85 percent of the worlds output, agreed to cooperate closely to kick-start the moribund global economy and reform financial institutions.

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World Bank president Robert Zoellick called on the G20 to follow through on their commitments, saying "in addition to communiques, you’ve got to have delivery."

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But a Treasury official signaled that no major announcements were expected from the G20 and G7 meetings.

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These meetings mainly will provide the opportunity to exchange updates on countries economic conditions, the official said.

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Geithner has indicated that he would urge the G20 partners to continue to support their respective economies long enough so that a recovery can take root, like the United States is trying to do with its 787-billion-dollar, three-year stimulus program launched in February.

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The G7 and G20 meetings also were expected to be used to push forward pledges to reform the financial system, albeit focused more on national reforms than on an international scale.

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The G20’s London promises of massive new resources for the International Monetary Fund and the World Bank also were to figure on the agenda.

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The IMF was the main beneficiary at the G20 summit, where leaders agreed to triple its war chest to 750 billion dollars by adding 500 billion dollars, some of it already pledged.

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On Thursday France signed a commitment to provide the IMF with an additional 16 billion dollars to help fight the worst global financial crisis since the 1930’s Great Depression.