WASHINGTON – Finance ministers and central bank governors from the Group of 20 major economies discussed the U.S. budget ceiling impasse during the first-day session of their meeting Friday, saying a default by the United States could hurt the global economy.
Finance Minister Taro Aso told reporters after the meeting that he called on Washington to settle the problem without any delay.
Many other participants shared similar concerns about the fiscal impasse, Aso, who is also deputy prime minister, suggested.
He also said he made a similar call for an early settlement of the debt ceiling limit and the partial government shutdown during a bilateral meeting with U.S. Treasury Secretary Jack Lew on the sidelines of the G-20 talks.
The finance ministers and central bank governors from the G-20 economies gathered as U.S. President Barack Obama and leading lawmakers showed only small signs of working to break the fiscal gridlock of the world’s largest economy.
The U.S. government partially shut down after the divided Congress failed to pass a budget by the Oct. 1 start of fiscal 2014.
House of Representatives Speaker John Boehner proposed the same day a deal aimed at increasing the limit of government borrowing for six weeks, a move that pushed the Dow Jones industrial average up more than 2 percent. Obama, Boehner and other Republican leaders discussed the proposal Thursday but “no specific determination was made,” the White House said.
The two parties have failed to agree to raise the limit on the amount the government can borrow, which means that next week the country could technically be short of the funds needed to make payments for a number of items, such as interest on government bonds.
The G-20 officials were to resume their talks Friday and release a statement at the end of the event.
The G-20 meeting came after Prime Minister Shinzo Abe said his government will raise the sales tax to 8 percent next April from the current 5 percent to fund social security and welfare costs and consolidate Japan’s debt-ridden finances.
Aso promoted a stimulus package aimed at mitigating the impact of the first consumption tax hike in 17 years, including a supplementary budget for fiscal 2013 worth about ¥5 trillion and a corporate tax break worth about ¥1 trillion.
The G-20 officials gathered in Washington at a time the financial markets are closely watching when the U.S. Federal Reserve will decide to taper its quantitative easing through an asset purchase program.
The timing of the Fed’s scaling down of the asset buying program has been a topic among other countries, especially emerging economies, due to concern that the move could trigger further capital outflows from developing economies and thwart their growth.
In connection with the effect on emerging economies, Japan asked such countries to take steps to make themselves resistant to external shocks by managing macroeconomic policy appropriately and strengthening their financial systems, Aso said.
He also told his G-20 counterparts that international coordination is important to prevent a financial crisis, introducing an agreement between Japan and India last month to boost their bilateral currency swap agreement to $50 billion from $15 billion.
Bank of Japan Gov. Haruhiko Kuroda said after arriving in Washington to attend the meeting that he hopes the United States will resolve the problems early and lead the global economy.
“It will not be desirable if this fiscal impasse drags on and U.S. financial markets and economic confidence are adversely affected,” Kuroda told reporters.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
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