G7 ministers meet on global growth overshadowed by Greek crisis

G7 finance ministers and governors pose for a family photo during the G7 summit at the Palace Residenzschloss in Dresden, eastern Germany, on May 28, 2015. -- PHOTO: AFP
G7 finance ministers and governors pose for a family photo during the G7 summit at the Palace Residenzschloss in Dresden, eastern Germany, on May 28, 2015. -- PHOTO: AFP

DRESDEN, Germany (AFP) - Finance ministers and central bank governors of the Group of Seven wealthiest nations gathered in Dresden Thursday to seek ways of boosting global growth, while the Greek crisis also cast its shadow over the talks.

German Finance Minister Wolfgang Schaeuble had invited his counterparts from Britain, Canada, France, Italy, Japan and the United States for an "in-depth exchange of views" on a wide range of subjects, from the state of the global economy, to financial regulation, tax evasion, and ways of starving terror groups like the Islamic State of funding.

Germany currently holds the rotating G7 presidency and has been at pains to stress that the Greek crisis is not officially on the agenda.

Berlin insists that the G7 is not the correct forum for the Greek dossier, not least because Athens is not represented.

But with all of the other key actors present - notably International Monetary Fund (IMF) chief Christine Lagarde, Eurogroup president Jeroen Dijsselbloem, European Central Bank (ECB) chief Mario Draghi and European Union (EU) monetary affairs commissioner Pierre Moscovici - the subject was on everyone's minds.

Just a day earlier, Athens had said it was close to a loan deal with its creditors that would unlock badly-needed bailout funds for its struggling economy.

'Not there yet'

But the EU poured cold water on that optimism on Thursday.

"We're not there yet. There are open issues which need to be resolved," European Commission spokeswoman Annika Breidthardt told reporters in Brussels when asked about the negotiations.

G7 host Schaeuble denied there had been any new significant breakthroughs.

Discussions "have not really progressed much further," he told ARD German public television on Wednesday evening, adding that he was "also a bit surprised that Athens is always saying that a deal is imminent."

One participant in the talks on Thursday insisted that "there is nothing on paper. Zero." But it is not just the Europeans who insist that Greece's fate in the eurozone is a matter of urgency.

IMF chief Lagarde, interviewed by German television, said there was "still a lot of work to do" and no "substantial result" had yet been achieved.

"Everyone has to double down, and treat the next deadline as if it's the last deadline and get this resolved," said US Treasury Secretary Jack Lew.

"The risk of going from deadline to deadline only increases the risk of an accident," Lew said in London before heading to Dresden.

The ECB warned for its part that the Greek crisis could pose a risk to financial stability in the euro area in the future.

Symposium of leading economists

For the first time at a G7 finance meeting, a number of the world's leading economists and monetary policy experts are among those invited.

Economists such as Nouriel Roubini, Kenneth Rogoff and former US treasury secretary Larry Summers, all took part in a symposium on Thursday morning.

The French government said it expected the United States to come to Dresden asking the Europeans to do more to get the global economy moving again and redress trade imbalances, such as the high surpluses of countries like Germany.

The G7 ministers will also examine the current high level of volatility on the financial markets.

A French source said that the possible emergence of financial bubbles was also a matter of concern.

The Chinese currency, the yuan or renminbi, could also feature in discussions, as Beijing continues to push for it to play a greater role in the world financial system, such as being included in the basket that makes up the IMF's own "special drawing rights" reserve currency.

Washington has long claimed that the yuan was manipulated, but the IMF said on Tuesday that the currency is "no longer undervalued".

The meeting began on Wednesday evening with a short ceremony in Dresden's rebuilt Frauenkirche church, which was almost totally destroyed in ]bombing by the British and US allies during World War II and the remaining ruins were left as a war memorial for more than 50 years.

But it was painstakingly rebuilt following German unification and finally reconsecrated in 2005.

Contrary to past practice, the German government does not plan to issue a final communique when the meeting wraps up on Friday.