Group of Seven finance ministers said on Saturday prospects for global growth are favourable but warned rising oil prices are a risk, and repeated a warning against excess volatility in foreign exchange rates.
The G7 dropped buoyant language on low inflation, firming confidence and job growth that had been in a draft of the communiqué obtained by Reuters, but said the global recovery had strengthened since the group last met in Boca Raton, Florida, in February. "Prospects are favourable, and although risks remain, such as energy prices, overall the balance of risks to the outlook has improved," the ministers and central bankers from the United States, Italy, Germany, the UK, France, Canada and Japan said a communiqué issued after a meeting in Washington.
"Additional pro-growth reforms are essential to deliver stronger and more balanced global growth, boost employment, and raise incomes," it added.
The G7 statement reaffirmed that exchange rates should reflect economic fundamentals, and urged more currency flexibility in nations that did not have flexible systems.
It said the G7 would continue to monitor exchange markets closely and co-operate as appropriate, and excess volatility and disorderly movements in exchange rates are undesirable for economic growth.
The G7 stated its commitment to sound fiscal policies, and said the ministers had reviewed ways to reduce fiscal deficits.
The group said economic fundamentals had improved in many emerging market countries. It noted financially troubled Argentina had made progress to get its economy back on track, but said the country had more work to do.
"Sustained and sound policies (in emerging markets) are essential to support lasting growth and reduce external vulnerabilities. In the case of Argentina, progress has been made, but further progress in required," it said.
The group of rich nations said "rapid progress and early conclusion" of the Doha Round of global trade talks was "imperative" for global growth and poverty reduction.
The ministers also called on other nations to join the G7 in reducing the debt burdens of Iraq and Afghanistan, and said economic growth and job creation in the Middle East were a priority.
"We stand ready to assist Iraq, Afghanistan, and West Bank and Gaza in their development efforts," they said.
NOISY PROTESTS GREET WORLD FINANCIAL LEADERS: Critics of the World Bank and International Monetary Fund gathered on Saturday morning in Washington to greet the world's financial leaders with a noisy appeal for reform.
Organisers said they expected thousands of demonstrators to join the so-called "cacerolazo" rally, modelled after Latin American pot-banging protests. The group will march to a park near the World Bank and IMF headquarters, where the lenders are holding their spring meetings.
Finance ministers from the Group of Seven industrialised nations are also gathering in the US capital on the sidelines of the semi-annual World Bank and IMF meetings.
Police barricaded several blocks of downtown Washington to control access to the lenders' headquarters and meeting sites. Downtown streets were quiet early Saturday.
Metropolitan Washington Police spokesman Kenny Bryson said no early disturbances had been reported.
"So far it's quiet," he said. "We are not expecting any problems today or tomorrow."
Protest organisers have said they do not expect their rally to disrupt the financial leaders' meetings. A Sunday women's rights march, organised separately from the IMF and World Bank events, is also expected to be peaceful.
Mobilisation for Global Justice, a Washington-based network of activist groups, advocates wholesale reform of the IMF and World Bank. The group's demands include the cancellation of all poor country debt using the lenders' own funds.
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