G8 finance ministers optimistic about world economy

OSAKA, Japan, June 14 (Xinhua) -- Despite further declines in the U.S. housing prices, greater strains in world financial market and elevated commodity prices, notably surging food and oil prices, the finance ministers from the Group of Eight (G8) expressed Saturday their optimistic about the world economy.

The G8 finance chiefs offered their insights on such major issues as the world economy, surging oil and food prices, climate change and African development at the conclusion of a two-day session Saturday in the central Japanese city of Osaka.

They, however, warned that as strains remain, especially in money and credit markets, it is imperative to enhance transparency and risk awareness in the light of risks to financial stability.

They reaffirmed their commitment to completing the strategy launched last October for strengthening the resilience of the financial system, calling for continued efforts by financial firms to improve disclosure and risk management practices, and to enhance their capital base as needed.

Encouraging the financial services industry to act upon the lessons they learned from recent events, the financial chiefs expressed the hope for concrete progress in closer cooperation between the International Monetary Fund (IMF) and the Financial Stability Forum (FSF) on reinforcing early warning capabilities.

On the issue of elevated oil prices, the ministers said that it reflects rising world demand and supply constraints, and other elements such as geopolitical concerns and financial factors also play a role.

They suggested that on the demand side, energy efficiency of all economies should be further improved and diversification of the energy sources pursued while on the supply side, oil producing countries should increase production and invest to enhance long-term production capacity, and all economies should increase refinery capacity.

And the oil markets should be more efficient by promoting greater transparency and reliability in market data, including the data on oil stocks and futures.

With regard to the hike in food prices, the ministers argued that the international community should respond with an integrated approach that addresses the immediate effects of the crisis.

In the short term, donors should unite to provide emergency assistance; in the medium term, international organizations and donors should collectively support partner countries' efforts to increase agricultural production, they said, adding that it is imperative to remove supply-side constraints and export restrictions.

During the G8 finance ministers meeting, the "G8 Action Plan for Climate Change to Enhance the Engagement of Private and Public Financial Institutions" was agreed on to help developing countries tackle climate change.

The ministers expressed their welcome and support for the establishment of the Climate Investment Funds (CIFs), launched by Japan, the United States and Britain to financially assist developing countries in curbing greenhouse gas emissions.

They also underscored the critical roles of private sector in providing large-scale investment into low carbon activities.

In support of African development, the finance ministers proposed improving the investment climate and strengthening the financial sector, which were termed as two pillars in "G8 Action Plan for Private Sector Led Growth in Africa" adopted in the ministerial meeting.

They pledged to increase contributions for the development of reliable infrastructures, such as cross-border transport corridors and help strengthen local financial institutions, promote local currency financing for African borrowers, enhance local bond market development in African countries, and facilitate remittance flows.

The G8 Finance ministers meeting opened Friday in the run-up to the G8 summit scheduled for July 7-9 in the Toyako (Lake Toya) resort area in Hokkaido.