G20 warns global recovery still fragile - draft

The Group of 20 has warned in a draft communique that the global recovery remains fragile but the document contains no agreement on whether to impose a global bank levy.

"The recent volatility in financial markets reminds us that the global economy is still fragile and international cooperation is much needed," Dow Jones Newswires quoted the draft as saying.

"We remain in the constant state of alertness; closely monitoring the economy, continuously pursuing well-coordinated economic policies and standing ready to do whatever else is necessary to ensure global financial stability."

The draft statement is to be completed by G20 finance ministers and central bankers when they meet today and tomorrow in the South Korean city of Busan.

It comes as the eurozone debt crisis threatens to derail a fragile global recovery, with nations trying to reduce massive budget deficits.

Ahead of the meeting, the head of the International Monetary Fund, Dominique Strauss-Kahn, stressed the importance of dealing with eurozone debt problems that have roiled financial markets and sent the euro plunging.

"It will be important that emphasis is placed on stimulating growth. Without growth, the debt problems will be much more difficult to resolve, and fostering reforms that will help support growth will be key," he told Yonhap news agency.

The G20 communique as quoted by Dow Jones Newswires does not indicate any agreement on the contentious issue of a bank levy to pay for future financial sector bailouts.

The text merely says the G20 "agreed to develop, with input from the IMF a set of principles on how the financial sector could make a fair and substantial contribution" to the cost of cleaning up after financial crises.

The levy is supported by European powers and the United States but resisted by some developing nations plus Canada and Australia, who argue that they should not have to pay to clear up a mess they did not create.

On Wednesday, US Treasury Secretary Timothy Geithner sought to prod economic powers towards a set of common financial rules, as he tries to prevent competing national rules from throwing up fresh trade barriers.

Mr Geithner said he wanted to "accelerate progress on reaching and putting in place global agreements on the core reforms".

Mr Geithner admitted agreement on some key reforms, including a global bank tax, would not come at this week's meeting but said differences were "narrowing".

The draft communique also says that the crisis shows the "importance of sustainable public finances and the need for countries with serious fiscal challenges to expeditiously pursue credible, coordinated, growth-friendly and tailored fiscal consolidation".