The world's seven richest nations embarked Saturday on an overhaul of global economic management following financial crisis in Asia and promised new short-term trade finance to the region's troubled economies.
The finance ministers of the Group of Seven were united - and relatively sanguine - about the impact of the crises in Asia."As long as the affected Asian countries follow through with reform, and the rest of the world responds appropriately, the overall effect of the Asian crisis on world growth in 1998 should be manageable," the group said in a statement.
But the United States, Canada, Britain, Germany, France and Italy indicated that the seventh member Japan, in a new economic plan announced Friday, had not done enough to stimulate domestic demand, and thus imports.
On international monetary reform, plans include a code of conduct run by the International Monetary Fund, stricter supervision of banks and other financial institutions, and faster reporting of liabilities.
The ministers will report in May when the leaders of the G7 nations and Russia meet in Birmingham, England.
Russian officials joined the others Saturday evening for a dinner hosted by Britain's treasury chief, Chancellor of the Exchequer Gordon Brown, at 11 Downing St. and a conference on job stimulation which runs through Sunday.
Representatives discussed the effect of globalization and technology on the labor market, unemployment among youths and older workers and how to make work more attractive than welfare, among other issues.
"Not only are there lessons to learn, but we have a chance to build something that is stronger for the years ahead," Brown said of new international rules.
Italian Finance Minister Carlo Azeglio Ciampi said under new rules the IMF needed "to be able to provide early warning and to intervene."
The IMF, which has already has assembled a $100 billion bailout package for South Korea, Thailand and Indonesia, the three worst-hit countries, has been criticized in the U.S. Congress for failing to warn in time of the Asian crisis.
The new increase in short-term trade financing, instigated by the United States, includes up to $1 billion for South Korea, and, providing Indonesia and Thailand implement IMF-demanded economic reforms, similar amounts for those two countries.
"We (have) started the process of turning the faucet back on," said James A. Harmon, president of the U.S. government's Export-Import Bank.
Harmon met in London on Friday with heads of export credit agencies from the G7 group and 11 other countries, including Australia and Mexico.
Among other problems, private banks are refusing short-term trade guarantees to the affected Asian countries, hurting their recovery prospects and trade with the West.
The United States, which this month reported a nine-year high in its trade deficit, led criticism of Japan's huge trade surplus.
"Unless something changes in Japan, our trade deficit with Japan is going to go up," said Treasury Secretary Robert Rubin. "All of this has at least the potential for fomenting undesirable protectionist practices."