* U.S. Treasury chief Lew tells emerging markets to get
house in order
* Lew urges efforts to boost domestic demand in China,
* Hard target for global growth could be in communique -
By Wayne Cole
SYDNEY, Feb 21 The world's rich nations pushed
back against emerging market complaints about the spillover
effects of their monetary polices, saying on Friday they had to
get their own houses in order and get with the agenda of lifting
As finance ministers and central bank chiefs from the Group
of 20 developed and emerging gather ahead of a weekend meeting
in Sydney, many are already talking at cross purposes.
Emerging nations want the U.S. Federal Reserve to calibrate
its winding down of stimulus so as to mitigate the impact on
their economies. Developed members reply that the troubles in
the emerging world are mostly homegrown and domestic interest
rates have to be set with domestic recoveries in mind.
"Emerging markets need to take steps of their own to get
their fiscal house in order and put structural reforms in
place," U.S. Treasury Secretary Jack Lew said at a financial
conference in Sydney ahead of the ministerial meetings.
That was a sentiment very much echoed by the finance
ministers of Japan, Britain and Germany.
German's Wolfgang Schaeuble told CNBC that emerging
countries first had to do their homework, before demanding
solidarity from the rest of the G20.
Japan's Taro Aso said the Fed's taper was positive as it
reflected an improving U.S. economy, even if it raised the risk
of sharp capital outflows from some others.
"It is important for emerging economies to correct these
things by making their own efforts," Aso said in Tokyo.
Developing nations from South Africa to Turkey to Russia
have seen their currencies crumble in recent months as the
prospect of higher returns in the United States sucked foreign
funds from their economies.
South Korea Deputy Prime Minister, Minister of Strategy and
Finance, Hyun Oh Seok, suggested the Fed and other major central
banks could at least strive to avoid surprises in their policy.
"QE tapering should be undertaken in a very orderly manner
and carefully calibrated given the global economy today is very
much interconnected," Hyun told Reuters.
HARD TARGET GAINS SUPPORT
The head of the U.S. Treasury also had pointed advice for
other major nations, calling on China, Japan and Europe to make
domestic demand the engine room of growth.
"I think it's a cross-cutting theme to what we see as the
challenge for the global economy," said Lew. "The U.S. recovery
is healthy and moving very much in the right direction and
picking up velocity, but it can't make up for a lack of demand
and growth in the other key economies."
Australian Treasurer Joe Hockey is trying to bring some
much-needed focus to the G20, proposing members sign on to
ambitious growth agendas, and hold each other to account for
And he's having some early success. Setting such a growth
target was "a good idea", IMF Managing Director Christine
Lagarde said on Thursday. "There is a potential for doing better
and more, if only countries take some action."
He won further support on Friday from Britain's finance
minister, George Osborne. "If we could adopt a target, or an
aspiration, that would be a good thing," Osborne said in Sydney.
"I'm with Joe on this."
The need for some sort of fresh stimulus was highlighted by
a grim report from The Organisation for Economic Co-operation
and Development released on Friday.
It warned that sweeping reforms were urgently needed to
boost productivity and lower barriers to trade to avoid a new
era of slow growth and stubbornly high unemployment.
"Our message to G20 finance ministers today will be
unambiguous: go structural. Go structural to achieve a strong
and sustainable balance inclusive growth," OECD
Secretary-General Angel Gurria told reporters.
Yet the idea of setting concrete goals for the G20 has
caused nothing but friction in the past, with proposals to
target fiscal and current account deficits coming to nothing in
The proposal has already drawn scepticism, with a German
government source criticising the idea as a "slightly antiquated
form for economic planning".
Yet late Friday, a G20 source said there was a growing
chance the final communique from this weekend's meeting would
indeed include a single goal for growth.
"It's quite likely there will be a target for global growth.
None for each country," the source said.