G-7 meet: Ministers issue alert against graft

TOKYO, JAN. 22. The Group of Seven nations today issued an alert against corruption, warning that it could undermine the benefits of the global financial system.

Besides money laundering and harmful tax competition, ``the benefits and opportunities of the international financial system can also be undermined by corruption,'' a G-7 communique said.

``We support the work being done in various fora on anti- corruption measures,'' said the statement issued after a one-day meeting of the G-7 Finance Ministers and Central Bank Governors. ``We expect the international financial institutions to also strengthen governance and anti-money laundering measures in programmes with member countries.'' The G-7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.

The group bowed to increasing U.S. alarm and issued a joint warning that the world needs more balanced growth, especially from sluggish Japan.

``We see improved prospects for non-inflationary growth in the major industrial economies and the world economy as a whole,'' said the statement. ``But the challenge remains to secure a more balanced pattern of growth among our economies that is important to sustaining the expansion''.

Immediately after the meeting, the U.S. Treasury Secretary, Mr. Lawrence Summers, rammed home the point, demanding Japan open its markets to ensure faster growth critical to the world.

``What is most important for Japan and what is most important for the global economy is that sustained domestic demand-led growth be achieved in Japan,'' Mr. Summers said.

Japan won a G-7 endorsement for its fears that a strong yen would eat away at the value of its exports, one of the few strong pillars of its fragile recovery. The financial chiefs agreed with Japan's concern about possible damage inflicted by the high yen on Japan and the world economy.

``We will continue to monitor developments in exchange markets and cooperate as appropriate,'' they said in the joint statement.

But the Japanese Finance Minister, Mr. Kiichi Miyazawa, warned that Japan's future hinged on private demand. ``Now is the time to expect a recovery consumption in private consumption,'' he told a news conference after the meeting. ``Without it we cannot expect the economy to suddenly record growth of three per cent or so.'' In the past two years alone, Japan has forked out about $ 552 billions in extra spending to stimulate demand.

Mr. Summers said fiscal policy was only part of the answer, however, pointing to Japan's failure to open its telecommunications market in line with Washington demands.

The G-7 statement stressed the need to ``take advantage of the investment opportunities created by new technologies,'' echoing U.S. frustration at Japan's failure to push along the Internet bandwagon with lower telephone costs.

- AFP

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