G20 members agree economic recovery to continue

By Yoo Choonsik and Rachel Armstrong

September 4, 2010 2:20 PM EDT

G20 delegates agreed on Saturday global economic recovery would endure although the speed of expansion may slow, a South Korean official said.

Kim Jae-chun, deputy governor of South Korea's central bank who co-chaired the meeting of G20 finance and central bank deputies, also told reporters they thought market reaction to concerns about economic slowdown was overblown.

"There was an agreement that the (global) recovery will continue even though the speed may slow from the level we thought of two to three months ago," Kim said after their meeting in the country's southwestern city of Gwangju.

Another official from a member country, who spoke on condition of anonymity, said there was discussion about the issue of readjusting representation on the International Monetary Fund's executive board but declined to elaborate.

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John Lipsky, the IMF's first deputy managing director, declined to comment when asked if the issue would be resolved soon.

The G20 members have pledged to reach an agreement on the issue by the leaders' summit in Seoul in November but Europe has been reluctant to accept the proposals as it would diminish its voting rights on the board.

"Everybody is working very hard on it," said Jean-Pierre Landau, deputy governor of the Bank of France.

A European Union diplomat said on Friday that EU finance ministers would hold substantive talks on a U.S. push to cut Europe's representation at the IMF at an informal meeting at the end of this month.

The United States, frustrated at Europe's refusal to share more IMF power with emerging economies, took unprecedented action last month to block plans that would have kept Europe's long-running dominance over the 24-member board.

The officials from the Group of 20 developed and major emerging economies and from international organizations will meet again on Sunday to discuss issues including reform in the global financial regulatory framework.

(Editing by Mike Peacock)