Group of 7 Vows To Keep Cash Flowing

On Saturday the G-7's meeting in the Canadian Arctic was concluded. The seven largest economies decided to stay with the fiscal stimulus plan despite the huge debts of some European governments. Britain’s chancellor of the Exchequer had said "We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established.” The Euro is loosing value due to the large debt in Greece, accompanied by Portugal, Spain, and Italy. However, American officials do not believe that Greece will default, due to the extensive programs that are going to be initiated. European officials do not believe the IMF should be involved in the matter because of political pressure to decrease spending and increase revenues. The G-7 does not believe this is an issue that they should be handling so it was turned over to the European Union. It is a worry that sovereign debt might come to effect Britain and the US. The IMF concluded that rising sovereign debt “could crowd out private sector credit growth, gradually raising interest rates for private borrowers and putting a drag on the economic recovery.” Another worry is that "massive debts" could also lead to an increased cost of borrowing to the government. In conclusion, the G-7 declared that stimulus spending was necessary in the short run to speed up the process for recovery.