WRAPUP 1-G20 to keep stimulus pledge, launch growth framework

By Sumeet Desai

LONDON, Nov 4 (Reuters) - G20 policymakers will this weekend keep their pledge to keep economic life-support packages in place for now and try establish a new framework to keep an eye on each others' economies and prevent future crises.

Finance ministers and central bankers from the Group of 20 club of rich and developing nations will gather in St Andrews, Scotland, on Nov 6-7 to follow up on agreements made at a leaders' summit in Pittsburgh in September.

Since then more signs have emerged that the world is coming out of the worst downturn since the World War 2 and policymakers will try to agree principles to manage the eventual withdrawal of the extraordinary stimulus measures in a coordinated way.

"There will be a set of discussions about how we're going to sequence all this as governments think about moving from a period of stress and so forth to a period that's steadier," U.S. Deputy Treasury Secretary Neal Wolin said in Johannesburg.

But for now policymakers want to make sure the recovery is not derailed.

"We are not yet back to trend growth levels," a UK government source said. "I expect we will have the same language as in Pittsburgh, that the current support measures need to be kept in place until recovery is well secured."

Speaking in Paris, a French official agreed: "Nobody will say we have definitively left the crisis behind...We don't want to make the same mistakes that have been made in the past by withdrawing strategies too early."

The weekend's meeting follows policy decisions by the UK, United States and European central banks, expected to affirm their commitment for the moment to keeping interest rates ultra-low for the time being.

The U.S. Federal Reserve, though, is expected to acknowledge there has been some improvement, while ECB policymakers have already sent signals that it will have to start phasing out some of its extraordinary support for money markets next year.

WEAK DOLLAR

While some countries have been clearly concerned about the weakness of the dollar and volatility in foreign exchange markets, currencies are not on the agenda for the G20 meeting and are unlikely to feature in any communique, expected at 1500 GMT on Saturday.

Officials say the two main issues are expected to be establishing how the framework for growth agreed in Pittsburgh would actually work and climate finance ahead of an environment summit in Copenhagen. The Danish Prime Minister will attend the Scotland meeting.

Countries are expected to sign up to a process where they submit their own projections for their economies which will then be assessed by the International Monetary Fund to see if they are compatible with each other and if not what policy changes would be required, which would be discussed by the G20.

The country projections will not just focus on current account imbalances, the source said, but on several variables such as components of aggregate demand or public finances.