G7 finance ministers meet to discuss debt crisis, global growth

Sep 9, 2011, 5:01 GMT

Marseille, France - The finance ministers and central bank chiefs of the Group of Seven (G7) leading industrialized countries were set to discuss ways of preserving the tenuous global recovery at a meeting later Friday in the French city of Marseille.

The debt crises in the eurozone and United States and concerns about the health of European banks were also expected to dominate the meeting.

The G7 comprises the United States, Canada Japan, Germany, France, Italy and Britain.

On Saturday, Russia joins the meeting to discuss the Deauville Partnership - a multi-billion-dollar programme of aid and credit to Egypt and Tunisia that was agreed at a G8 summit in Deauville in May.

The talks come amid growing fears of a slide back towards recession, following disappointing second-quarter growth figures from the United States, Germany, France and other major economies, and concerns that austerity programmes in Europe could act as a brake on the global economy.

The ministers are expected to give commitments that they will take measures to stimulate growth, but are not expected to come up with any common plan.

Germany's deputy finance minister Joerg Asmussen on Wednesday ruled out any short-term stimulus measures, saying more debt was not the solution to the eurozone debt crisis. Germany would make that position 'very clear' in Marseille, he said.

Ahead of the talks, US officials echoed the concerns expressed by International Monetary Fund (IMF) chief Christine Lagarde about the capitalization of European banks.

It was 'vitally important' for Europe to recapitalize its banks, a senior US official said.

The US had refinanced its banking system in the aftermath of the 2008/2009 crisis, and US banks were now 'much better capitalized than they were going into the crisis.'

For Europe to do the same would be 'the most important contribution they can make at the current time to the global recovery,' she said.