By Brai Odion-Esene

WASHINGTON (MNI) – A senior U.S. Treasury official Tuesday made
clear the United States will push fellow G20 members to honor, and
begin implementing agreements on coordinated economic policies.

The policies include “supporting, not impeding, the global
adjustment process and allowing exchange rates to move to reflect market
fundamentals,” the official said of the annual meetings of the
International Monetary Fund and World Bank beginning Friday.

“We are focused on ensuring G20 countries implement their
commitments to rebalancing … and include market-oriented exchange
rates in the set of policy tools that are vital to achieving that
rebalancing,” the Treasury official told reporters during a briefing
ahead of the IMF and World Bank meetings.

The G7 will hold informal meeting Friday and the G20 will hold a
working breakfast with the IMF’s governing committee Saturday, but no
communique is expected from either coming as they do so soon before the
formal ministerial Oct. 21-23 and the summit Nov. 11-12 in Seoul.

Enabling exchange rates to reflect market forces is a critical
element of the global adjustment process, the official said, a point the
U.S. will make reiterate this weekend.

And while the global economy is beyond the “acute phase” of the
financial crisis, the official stressed that another priority for the
Obama administration will to ensure G-20 members do not implement a
premature, simultaneous removal of fiscal support that would hurt the
recovery.

The official said efforts to create more of a balance between
surplus and deficit nations will be the central discussion at both the
IMF annual meeting this weekend, and the G20 meetings later this month.

This rebalancing is necessary, the official argued, so that the G20
as a group can get on to a more sustainable and balanced path.

“As part of the rebalancing conversation, of course we will have
conversations about how the global adjustment is to take place,” and the
various mechanisms that will enable the adjustment to happen, the
official said.

The United States has been very consistent in its position that the
leading economies should have exchange rates based on market
fundamentals, the official said.

And without referencing China or its currency policies directly,
the official added, “we will continue to support that position … we
expect that other countries will continue to move towards honoring their
full set of G20 commitments.”

Asked how much support the U.S. will get from other countries to
push China on yuan reform, the Treasury official said there are a whole
set of countries that are committed to allowing adjustment to take place
in the global economy.

“I actually expect that in our conversations this weekend, and in
the weeks ahead, that there will be robust agreement around the critical
importance of allowing adjustment to take place in the global economy,”
the official said.

In Pittsburgh last year, world leaders made a committment to pursue
a set of policies that would be consistent with each other in achieving
more balance in the pattern of global growth, the Treasury official
noted.

This weekend’s IMF annual meeting is a very opportune time to begin
talking about all those issues, the official said, with the discussions
expected to continue at the next G20 summit in November.

Another important priority for the Obama administration remains the
need to strengthen a weak economic recovery, the official said. “We must
be careful to avoid a premature synchronized exit that could threaten
the global economic recovery.”

The surveillance responsibilities of the IMF will under be in the
spotlight this weekend, the Treasury official said, particularly in
ensuring progress towards rebalancing and that the international
adjustment process is allowed to work.

“The Fund must speak out effectively about the need for those
actions and their consistency,” the official said.

** Market News International Washington Bureau: 202-371-2121 **

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