LECCE, Italy (Reuters) – The world’s rich nations,  heartened by signs the credit crisis is easing, have started to  consider how to unwind rescue steps for their economies once  recovery is certain, their finance ministers said yesterday.

Meeting in southern Italy, the ministers described their  economies in the most positive terms since the collapse of  Lehman Brothers nine months ago ushered in the world’s worst  financial crisis since the Great Depression of the 1930s.

“The force of the economic storm is receding. There are  encouraging signs of stabilisation across many economies,” said  US Treasury Secretary Timothy Geithner as finance ministers of  the Group of Eight nations ended two-day talks.

A surge in long-term government bond yields over the past  several weeks shows financial markets fear huge sums of money  poured into economies through drastic stimulus will ultimately  fuel inflation and cripple state finances.

But ministers clearly differed over how quickly the world  should start rolling back huge state spending plans and hiking  interest rates. And there was continued disagreement over other  aspects of the crisis, especially testing the health of banks.

The meeting’s final joint statement said they  had asked the International Monetary Fund to help them analyse  possible ways of ending economic stimulus policies.

A G8 source, who declined to be named, told Reuters that the  IMF report would probably be presented at the fund’s October  annual meeting in Istanbul. Most private sector economists do  not expect any major tightening of fiscal and monetary policies  in the developed world before next year.

Pressure has been building in the G8, particularly from  fiscally conservative nations such as Germany and Canada, for  plans to wind down stimulus as soon as it is no longer needed —  “exit strategies” that would prevent market interest rates from  climbing high enough to threaten economic recovery.

MORE IN Archives


Reader Comments »

The Comments section is intended to provide a forum for reasoned and reasonable debate on the newspaper's content and is an extension of the newspaper and what it has become well known for over its history: accuracy, balance and fairness.
  • We reserve the right to edit/delete comments which contain attacks on other users, slander, coarse language and profanity, and gratuitous and incendiary references to race and ethnicity.
  • We moderate ALL comments, so your comment will not be published until it has been reviewed by a moderator.
  • Our Comments are powered by the Disqus service. You may comment as a Guest by entering your comment and selecting "Post as". Optionally, you may sign-in using your Facebook, Yahoo or Twitter Accounts.

    Disqus' Privacy Policy can be read here. Please read our Terms of Service and Privacy Policy.