G8 concerned over oil, food prices, calls for analysis

Business Materials 14 June 2008 14:07 (UTC +04:00)

Rising oil and commodity prices were threatening global economy growth, the finance ministers of the Group of Eight (G8) said Saturday but delayed concrete measures until further analysis of factors contributing to the price hikes, dpa reported.

"Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and may increase global inflationary pressure," the G8 finance ministers said after concluding their meeting in Osaka, Japan.

Foreign exchange issues and interest rates were however not discussed during the two-day talks, Japanese Finance Minster Fukushiro Nukaga said.

"We did not talk about it," he said, but added the topic was raised during bilateral meetings.

The finance ministers of the world's leading economies urged oil producers to increase production and transparency in the oil market, and called on consumer countries to improve energy efficiency, diversify energy sources, and reduce energy subsidies.

They however delayed concrete measures in favour of further analysis from the International Monetary Fund (IMF) and the International Energy Agency (IEA), in particular on the role of speculation.

IMF chief Dominique Strauss-Kahn said several G8 members believed it necessary to investigate whether speculation was driving prices, while US Treasury Secretary Henry Paulson was firm in his belief that the influence of speculation was negligible.

"There are multifaceted reasons," Nukaga told journalists, with Strauss-Kahn noting, "The rise in commodity prices has many reasons...demand is very close to maximum supply.

"You may also think that that's not enough and one may think that some financial considerations may be at stake - this is why the G8 asked the IMF to produce a report," he added.

Before jumping to conclusions, it was necessary to find out "what is really going on," Deputy Finance Minister Thomas Mirow, Germany's representative at the G8 said, explaining the lack of debate on hands-on measures.

For alleviating the world food crisis the G8 regarded it necessary to remove supply-side constraints and export restrictions and improve the efficiency of international agricultural markets, Paulson said.

Together with Britain and Japan, he called on other G8 members to sign up to new multilateral global warming funds, aimed at helping developing countries to finance the transfer to cleaner technologies.

The G8 "accepted their responsibility to show leadership in tackling climate change," the ministers said in their statement.

Development in Africa, a key issue of Japan's G8 presidency, seemed to take a back seat over global inflation woes. The eight nations vowed to honour their commitment to double aid to Africa and cancel 100 per cent of debts for certain eligible countries.

Further focus was to be on improving the investment climate in Africa and strengthening the private sector.

The G8 consists of the world's seven richest nations - the United States, Japan, Germany, Britain, France, Canada and Italy - as well as Russia.

The finance ministers were meeting in Osaka in the run-up to the G8 leaders' summit on the Japanese island Hokkaido in July.