APEC to keep spending taps open
Posted: 10 November 2009 1325 hrs

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SINGAPORE: Asia-Pacific finance chiefs, anxious about the potential for a "double-dip recession", will keep lavish stimulus spending in place for now, according to a draft communique obtained by AFP on Tuesday.

The statement is set to be released on Thursday by finance ministers of the 21-member Asia-Pacific Economic Cooperation (APEC) forum ahead of a weekend summit, joined by US President Barack Obama and the leaders of China and Russia.

"We agree that the solution is not to rush to fiscal tightening, especially while credit markets are still recovering," the draft text said, echoing an early version of the APEC leaders' declaration also obtained by AFP last week.

"Careful planning and timing withdrawal of extraordinary stimulus measures will help to avoid a double-dip recession," said the finance ministers' statement, which was being thrashed out by senior APEC officials in Singapore.

APEC foreign ministers will also convene in Singapore this week to pursue the 20-year-old organisation's longstanding - and lagging - goals of free trade and economic integration.

Climate change will be another major topic in the lead-up to a crucial meeting in Copenhagen next month. APEC looks set to call for sweeping cuts to greenhouse gas emissions while leaving the details up for debate.

"If there's going to be anything done on climate change, it's going to require the US and China to find some convergence," World Bank president Robert Zoellick said in Singapore on Tuesday.

Several of the APEC finance ministers are coming to Singapore straight after a meeting of the broader G20 grouping in Scotland, where there was no agreement on how cash should be delivered to help poorer nations tackle climate change.

In their draft statement, the APEC finance chiefs said they would look at ways to entrench "green growth" across the Pacific Rim organisation, which stretches from deeply impoverished Papua New Guinea to the United States.

APEC experts will look at developing markets to trade in carbon emissions and how to support environmentally friendly industries through private investment and government subsidies, the ministerial statement said.

On the global economic crisis, the ministers were expected to welcome the green shoots of recovery while keeping up their guard.

"While we have transited from a crisis to a more stable phase, we remain vigilant as economic recovery is still tentative and likely to be slow going forward," the draft said.

"We noted the initial positive effects of the stimulus measures, but also recognised their longer-term implications on public debt/deficits," it added.

The Obama administration implemented a US$787-billion Recovery Act in February which the White House says has saved or created nearly 650,000 jobs, and likely more than a million.

And analysts say massive stimulus packages rolled out by Asian governments played an important role in helping the region weather the downturn better than the United States or Europe.

The Asian packages totalled more than US$1.0 trillion, according to a tally by global ratings agency Standard and Poor's, led by US$585 billion in spending by China.

APEC member Australia has become the first developed nation to hike interest rates as it stages a decisive transition out of the global slowdown.

Australian Trade Minister Simon Crean said the country's strong currency had been pivotal to the recovery, and described the government's decision in 1983 to float the Australian dollar as "unequivocally good".

China, in contrast, refuses to relax its grip on the yuan's exchange rate.

- AFP/ir