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By Brian Love
PARIS, June 2 (Reuters) - G20 finance ministers will discuss the need to reduce debt without stifling economic recovery when they meet in South Korea this week, French Economy Minister Christine Lagarde said on Wednesday.
Lagarde said the June 4-5 meeting in the port city of Busan would focus on three areas: regulation of the financial sector, the long-term balance of the global economy and, in the nearer term, the need to reconcile growth promotion and debt reduction.
"How do we pursue necessary fiscal consolidation -- that's to say budget consolidation or reduction of deficits -- and on the other hand support economic growth? That's the whole difficulty of the exercise," she told a news conference.
"Fiscal consolidation must be considered imperative. It's an imperative that must be reconciled with support for growth which we know is fragile at this moment in time," Lagarde said.
Within the G20 group, debt reduction is more of a pressing issue for the developed countries than emerging ones such as China.
The IMF expects total G20 public debt to rise to 79 percent of gross domestic product in 2011 from 61 percent of GDP in 2007, before the financial crisis prompted a global recession.
That masks a forecast debt rise in advanced G20 economies from 78 to 109 percent in the same period, versus no rise at all in emerging G20 economies, where debt is much lower and in fact seen dipping marginally, from 37 percent in 2007 to 36 percent of GDP in 2011, according to recent IMF estimates.
Some officials said ahead of the G20 meeting that emerging market countries and some of the developed economies feared that if everyone rushed into heavy-handed fiscal consolidation at the same time, the post-recession recovery could suffer excessively.
AUSTERITY PUSH
Mindful of the European debt crisis that forced euro zone governments to rescue Greece and commit 750 billion euros to a market stabilisation plan last month, Lagarde was keen to show European countries would not let up on debt control efforts.
She brushed off a question from one journalist about concern in some G20 capitals that Germany was announcing fresh austerity when it was one of the European countries with fewer holes in its public finances to fill.
Lagarde said it was all a matter of "finetuning" and that there should be a carefully measured removal of the economic stimulus that governments put in place to combat recession.
"When I said we should withdraw from stimulus programmes on the tips of our toes, (when I said) that it's all in the finetuning -- that's what it is all about," she said.
"We need to be careful to avoid brutal shifts."
On the euro zone specifically, Lagarde said: "We're doing everything to restore confidence."
The Paris-based Organisation for Economic Co-operation and Development this month raised its forecast for global growth to 4.6 percent in 2010 and 4.5 percent in 2011, after a GDP contraction of 0.9 percent in 2009.
That recovery would be led by China and other emerging economies but remained risk-prone, primarily because of the inflated debts of advanced economies but also the difficulty of managing overheating dangers in emerging economic powers such as China and India.
The G20 spans all of the large industrialised economies of North America, Europe and Japan but also a host of others including the major rising economies such as China, India and Brazil. (Reporting by Brian Love and James Mackenzie; editing by Patrick Graham)