G7 seeks more Japanese moves to resolve crisis

Finance ministers and central bankers from the G7 will pressure Japan to stimulate growth in Asia and look for ways to avoid another regional economic meltdown when they meet in London today. Tokyo's announcement yesterday of an economic stimulation package will far from satisfy its Group of Seven partners, analysts said. They see Japan, the second largest economy in the world after the United States, as the only economic engine that can drag Asia out of an economic crisis that has sent shockwaves across the globe.

The package included a special 300 billion yen ($2.4 billion) loan to support trade in Asia, to be issued through the Export-Import Bank of Japan. The Japanese government also announced moves towards stabilising regional currencies.

But the ruling LDP party's refusal to raise spending or make permanent tax cuts will leave the US and other G7 governments frustrated.

The G7 financial chiefs from Britain, Canada, France, Germany, Italy, Japan, and the United States - who will be joined by Russia Sunday for a G8 conference on employment - will focus on the crisis in Indonesia.

They are likely to affirm their support for the International Monetary Fund, which wants President Suharto to implement tough reforms in exchange for a $43 billion rescue package.

President Suharto is threatening to peg the badly weakened rupiah to the US dollar, a measure the IMF says Indonesia is not ready for.

The IMF managing director, Mr Michel Camdessus, who will join the G7 financial leaders for part of today's discussions, has threatened to withdraw the rescue package if Mr Suharto goes ahead with his plan.

In the longer term, the G7 will discuss how economic rot can be stopped at the source, before it erupts and has a domino effect across a region as happened in Asia. The British Chancellor of the Exchequer, Mr Gordon Brown, says he wants the G7 to consider an international "code of fiscal and monetary conduct".