Enlarge imageBy Sumeet Desai
ST ANDREWS, Scotland (Reuters) - The Group of 20 leading nations will agree this weekend it is too early to pull the plug on emergency support for the global economy and launch a new system of checks to help rebalance world growth and prevent future crises.
Chancellor Alistair Darling is hosting the third meeting of G20 finance ministers and central bankers this year in St Andrews, Scotland from later on Friday, aiming to put flesh on the bones of agreements made at a leaders' summit in Pittsburgh in September.
Since then there have been growing signs that the world is finally coming out of the deepest downturn in decades and that things may be getting back to normal after a crisis that wiped out some of the biggest financial institutions.
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The European Central Bank on Thursday took a first small step towards easing out its crisis steps -- ultra-low interest rates and cash injections for the economy -- by signalling one-year loans to banks will not be repeated next year.
But Darling said it would be premature to declare victory over what has been the worst financial crisis since the 1930s and the extraordinary stimulus countries all around the world had thrown into their economies had to stay in place for now.
"I think we can reach agreement on firstly making sure we don't remove support too early because the recovery is by no means established everywhere," he told Reuters.
"Just as there was a consensus that we took action over the last year to stave off a serious downturn, there is a consensus that we can work together so that the next decade is one of growth and one of job creation," Darling said.
CHECKS AND BALANCE
Ten years after the G20 was formed, leaders agreed in Pittsburgh that it should be the world's main economic governing council, because it also includes most of the key developing economies -- unlike forums like the G7 or G8.
Officials say that proposals on the table in Scotland include a system where countries put forward projections for their own economies for examination by the International Monetary Fund to see if they are consistent with each other.
If not, then alternatives can be looked at within the G20.
Asked if that meant countries would be given targets they had to achieve, for example on GDP, Darling said: "I don't think it is a case of people telling countries what they ought to do."
"We need to have a target in our mind as we work through this of where we want to see world growth in the next few years but obviously the growth rates in individual countries will be different."
Officials have made clear currency moves are not on the formal agenda for the meeting, even if there is general disquiet about the weakness of the dollar behind closed doors.
The group may also look at proposals for creating a common pool of reserves to dissuade emerging market countries from accumulating massive foreign exchange reserves that could instead be used to boost growth.
Brazil's President Luiz Inacio Lula da Silva late on Thursday voiced concern the slight pickup in the world economy could hamper the drive for reform of the financial system.
"The small signs of improvement of the economy could create impediments for us to accomplish deep reforms without which humanity could have a relapse in a much more severe way (into) a new crisis," Lula said in a speech in London.
LONG ROAD TO COPENHAGEN
Another theme will be seeking a deal on climate finance ahead of an environmental summit in Copenhagen next month but Darling was doubtful that concrete results could be achieved.
"I want to use this weekend to engage finance ministers in the task of making sure we can get money on the table. We have been very clear we think $100 billion (60.2 billion pound) will be required," he said.
Talks on agreeing a budget for the cost of dealing with climate change at the last meeting of finance ministers and central bankers in London in September went nowhere.
"This is a classic case rather like world trade where the spirit is willing but some very great heavy lifting is going to be required if we are going to make the progress we need," Darling said.
"There is a long way to go, it is by no means certain that we will get the deal we need at Copenhagen. I know we will try our level best level to get there."
(Editing by Patrick Graham)
