TRG Treasury Fpo

LIMA, Peru—The world's finance officials must avoid resorting to "beggar-thy-neighbor" policies to revive growth, U.S. Treasury Secretary Jacob Lew said Thursday as economic leaders confronted an increasingly dour outlook for the global economy.

Mr. Lew, meeting with counterparts from around the world, called on countries to overhaul their economies and boost spending if they have room in their budgets. Finance officials have committed "not to undertake competitive devaluation, not to rely excessively on one policy tool—monetary policy," he told reporters as the International Monetary Fund's annual meeting kicked off here.

The IMF this week cut its forecast for global growth to its lowest level since the financial crisis and warned that rising risks in emerging markets threatened to trigger dangerous turmoil in financial markets and stall global growth.

"When you look around the world, the question is still the same," Mr. Lew said. Policy makers have the capacity to help boost growth, but "it's a test for all our political systems to determine whether we have the political will."

Uncertainty about the world's second-largest economy, China, triggered turbulence across global markets in recent months. International officials are uncertain whether the Chinese government will carry out promised policy overhauls meant to liberalize its economy. Many officials worry Beijing's decision in August to change its exchange-rate policy—a move that triggered a sharp drop in the value of the yuan—could end up being a long-term depreciation instead of more toward a more market-oriented currency.

China's move was followed by currency depreciation in other countries, from Vietnam and Kazakhstan. Japanese officials also mentioned the need to weaken the yen, feeding worries that Beijing's depreciation might have sparked a dangerous round of global currency friction.

U.S. officials also are concerned that European and Japanese policy makers are relying too heavily on monetary policy that depreciates the euro and yen.

"There's a question of using all the policy levers," Mr. Lew said. "There's certainly more that could be done on both demand and structural reform" in both economies, he said.

"Clearly there's capacity to do more, the question is, will they?" the secretary said.

Mr. Lew pointed to an agreement on international taxation backed by the Group of 20 leading economies meeting late Thursday. Just as countries should avoid undercutting other economies by devaluing their currencies, he said U.S.-backed efforts to fight global tax evasion would prevent countries from using tax systems that undercut other nations' revenue collection.

The Treasury secretary said U.S. lawmakers should support the economy by pressing ahead with transportation funding, restoring funding for the Export-Import Bank and passing key budget measures.

Congress has also undermined U.S. foreign policy and American influence by not ratifying a 2010 deal that would update the IMF's governance to reflect the growing power of emerging markets and boost the crisis-fighter's lending reserves, U.S. officials have said.

"It's very much in the U.S. economic and national interest for Congress to act" on all those measures, Mr. Lew said.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

October 08, 2015 21:05 ET (01:05 GMT)

Treasury Group Ltd (ASX:TRG)
Historical Stock Chart
From Mar 2024 to Apr 2024

Treasury Group Ltd (ASX:TRG)
Historical Stock Chart
From Apr 2023 to Apr 2024