Tough issues face finance chiefs

Japan's grim outlook is causing concern

By Andrew Walker BBC Economics correspondent, Washington

Washington sees a series of finance and development talks this weekend, starting with the Group of Seven (G7), leading developed countries, followed by the policy-making committees of the International Monetary Fund and the World Bank.

They meet against a background of an apparent recovery in the United States economy and the continued financial crisis in Argentina.

There is likely to be some relief that the US does seem to be recovering from the economic slowdown of last year and that, according to the IMF's managing director Horst Koehler, other regions of the world are beginning to get some of the benefits.

But there will be plenty of problems for these meetings to wrestle with.

Looming crisis

Within the G7, Japan continues to cause concern. After more than a decade of stagnation and almost as much lecturing from some other G7 members about how to fix the problem, Japan's economic outlook remains grim.

Argentina will also loom large in the discussions. The head of the IMF's mission to Argentina is back in Washington, reporting on the situation.

If further evidence were needed of how difficult the crisis is, it came with the news of the suspension of banking and foreign exchange transactions by the government in Buenos Aires.

There will also be some wrangling over US proposals to replace half of World Bank lending to the poorest countries with grants.

Opponents of these proposals say that the Bank needs loan repayments to finance further assistance.

The US Treasury Secretary, Paul O'Neill, has predicted some testy exchanges on this issue.

There will also be discussions about new initiatives to promote education in the developing world and how to stop the financial support for terrorism.