G-20 meeting in New York to review progress on financial front

Finance chiefs of the Group of Twenty (G-20) developed and developing nations are meeting in New York to take stock of the progress of the financial reconstruction efforts since their 2 April meet in London.

The G-20 meeting, hosted by US treasury secretary Timothy Geithner, will be preceded by a meeting of finance ministers and central bank governors of the Group of Seven (G-7) developed countries.

The meeting, which comes on the eve of the International Monetary Fund and World Bank meetings, however, is expected to fine-tune the responses of individual countries to the global economic crisis.

The meeting should be viewed in the background of 'Geithner's own admission that the US itself is responsible for much of the world's financial ills today.

Geithner and UK finance minister Alistair Darling, however, have indicated that they would urge the G-20 to continue support to their respective economies long enough for a global recovery to take root.

"Our priority today is to turn that agreement into action," said Darling, adding that individually G20 countries must put their commitments into practice.

The UK economy is widely expected to contract in the first quarter of this year. But, Darling said, he said ''There are reasons to be confident about the economy."

Both the UK and the US are sitting on huge stocks of toxic assets and it would take years to clear the toxic assets. Much would depend on the support the G-20 offers to the asset reconstruction programmes of the G7 countries.

The G-7 is also expected to push the G-20 on pledges to reform the financial system, albeit more on national reforms than on a global level.

The London promises of massive new resources for the International Monetary Fund and the World Bank – the sole beneficiaries of the 2 April G-20 meet - are also expected to figure on the agenda.

The G-20 leaders had agreed to triple IMF's war chest to $750 billion – some of the resources for it are already pledged, the latest to do so being France.

France on Thursday committed an additional $16 billion funds for the  IMF to help fight the global financial crisis

While G-7 has lost much of its relevance in the wake of the global financial market crisis and G-20 is gaining importance, the rest of the world still needs the US economy and financial system to recover in order for the world economy to thrive.

The G-20, created 10 years ago, includes the G7, the European Union, and Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.