Rising commodity prices, the weak U.S. dollar and reform of the World Bank and International Monetary Fund are topics expected to dominate an upcoming conference of finance officials from 20 of the world's major economies. The annual meeting of the G-20 is due to open Saturday in South Africa. Correspondent Scott Bobb reports from our bureau in Johannesburg.
Finance Ministers and Central Bank Governors of the G-20 are holding two days of discussions (Saturday and Sunday) amid concerns that rising commodity prices and the weak U.S. dollar are causing tension and volatility in global markets.
Prices for oil, gold and many food staples have risen markedly in the past year while the dollar has fallen to record lows against most major currencies.
An analyst with the South Africa Institute for International Affairs, Peter Draper, says the situation presents a number of challenges.
"The first [challenge] is dealing with the impact of rising commodity prices, whether you are an exporter or an importer," he said. "Either way, it needs to be managed."
He says another challenge is how to take advantage of greater budget flexibility provided by debt relief, more prudent fiscal policies and higher export revenues.
But the weak dollar is making exports of developing nations less attractive to the U.S. market which is a major source of revenue.
The United States government is expected to come under pressure to strengthen the dollar, but it is likely to resist citing the record high U.S. trade deficit.
China is likely to come under pressure to allow its currency to gain value on exchange markets. China maintains its currency rate within a narrow range pegged to the dollar. But the Chinese government says it is pursuing a gradual realignment of its currency, and will not allow it to float freely on world markets.
South African Finance Minister Trevor Manuel, who is chairing the conference, says he wants to find ways to end what he calls the boom and bust cycles of the global finance system.
Manuel said as a result a major priority is to reform the World Bank and International Monetary Fund, which were created more than 60 years ago by the Bretton Woods agreement.
"We want to discuss reform of the Bretton Woods institutions and you have two individuals who have articulated a vision," he said.
He was referring to the new directors of the World Bank and the International Monetary Fund, Robert Zoellick and Dominique Straus-Kahn, who will be making their first appearances before the G-20. Both have indicated a willingness to consider changes.
Developing nations want a greater voice in the oversight and management of the institutions and less stringent controls on their lending.
Peter Draper says it is difficult to build a consensus in a forum like the G-20, which has a large agenda of complex and highly technical issues.
"I don't expect huge breakthroughs," he noted. "I expect rather more incremental breakthroughs in certain areas and for the agenda to continue evolving over time."
But he says gatherings like the G-20 are needed to discuss issues of common interest even if they do not lead to big headlines.
The G-20 groups the world's most developed countries and 12 emerging nations. Together they represent two-thirds of the world's population, 90 percent of its gross domestic product and 80 percent of its trade.