Hard dealing amid the canapes
Monday 02 October 1995
They meet at a time when the currency markets are poised to overturn the ''orderly reversal'' of the dollar's fall against the yen, which the G7 ministers first said they sought at their April meeting and finally achieved in August. In the past 10 days the dollar has returned to its end-August level.
The G7 meeting next weekend is also expected to discuss a plan for rebuilding Bosnia after its bitter war. It will seek to co-ordinate UN emergency relief with longer-term projects by the World Bank and IMF.
However, these are areas where ministers on the whole agree about what needs to be done. There are several others with the potential to turn into anything from an "agreement to disagree" to a full-blown row.
A discussion of debt relief for the world's poorest countries falls into the former category. Britain has taken a lead during the past year in moving this unglamorous topic up the agenda. Chancellor Kenneth Clarke's proposal that the IMF sell some of its gold reserves, invest the proceeds and use the income for debt relief is unlikely to gain approval from fiscally strait-laced countries such as Japan and Germany.
A leaked World Bank proposal for a trust fund that would meet debt repayments is unlikely to be approved. Some of the G7 countries - the biggest shareholders in the bank and IMF - disagree in principle with anything that appears to let countries off their debts. But a broad agreement on what ought to be done for the world's poorest debtors could still emerge.
A second thorny topic is how to increase the IMF's crisis funds. This is one of the unresolved issues raised by the Mexico crisis at the turn of the year. When that broke, the fund happened to have plenty of cash on hand but it might not in future.
The front-runner as a source of extra crisis cash is an expansion of the General Arrangements to Borrow. This is a kind of IMF overdraft facility funded by the G10 countries - the G7 plus the Netherlands, Belgium, Sweden and late joiner Switzerland.
The seven biggest countries want to bring in other nations to expand this facility. The opposition will come from the four non-G7 members of the G10 club. They fear the dilution of their influence in the international financial arena. Another post-Mexico problem is putting the finishing touches to the IMF's surveillance of its member countries. The fund has successfully tightened up its annual ''Article Four'' consultations to the point where one head of state has made a complaint about how frank the fund's report was. However, it wants to publish a list of countries that do not meet its minimum standards for economic statistics. Dropping off the list would obviously scare away foreign investment. Some countries that fear their statistics are not up to scratch will object to the idea of publication.
The biggest battle of all, however, will not take place between participants at the meetings. It will be the battle to persuade the US Congress not to cut the American contribution to the World Bank's development arm, the IDA.
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