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U.S. crisis shouldn't slow G20 growth plan - Canada

* U.S. fiscal crisis to dominate G20 talks

* G20 can apply peer pressure to U.S.

* Canadian finance minister urges U.S. to tackle debt

* Canada to push for growth policy pledges in early 2014

By Louise Egan

OTTAWA, Oct 8 (Reuters) - The U.S. gridlock over government finances will dominate a meeting of G20 finance officials this week but should not slow down the group's work on an action plan to bolster long-term growth, a senior Canadian financial official said on Tuesday.

The official, who briefed reporters on condition of anonymity, said focusing on the short-term crisis in the United States was the responsible thing to do because increased uncertainty could throw a wrench in the efforts by the Group of 20 leading economies to engineer stronger growth. He said the G20 might have some influence on U.S. officials through peer pressure and discussion.

But he said the group should not lose sight of its ultimate goal of figuring out how to improve on a global recovery that has so far been unsatisfactory.

So far the U.S. government shutdown has had little effect on the Canadian economy. Exporters, who rely heavily on the U.S. market, say they have enough inventory to last a couple of weeks without problem.

But a prolonged shutdown and uncertainty over raising the U.S. debt ceiling could hurt Canada. "The closer you get to the edge of the cliff, the odds increase that somebody trips, so it's a problem," said Craig Wright, chief economist at RBC Capital Markets.

Finance Minister Jim Flaherty said he was confident of a quick resolution to the U.S. showdown and put the focus on the high level of public debt in Washington.

"That's a real long term problem for the U.S. and the global economy that needs to be tackled credibly," Flaherty said.

FROM RUSSIA TO AUSTRALIA

At the St. Petersburg summit last month, leaders agreed to an action plan to create jobs and strengthen growth.

Canada, which has been co-chairing a working group on growth strategies, wants countries to commit to specific policies and reforms to bolster long-term growth and will push for details on those plans earlier rather than later in 2014, he said.

From the Canadian perspective, the Washington meetings will be crucial for establishing priorities for 2014 when Australia hosts the G20.

Less of a worry for Canada is the eventual scaling back of the U.S. Federal Reserve's $85 billion-a-month bond purchasing program.

As long as the so-called tapering reflects an underlying U.S recovery, that is good news for Canada, the finance official said.

As for emerging economies which complain of market volatility due to talk of Fed tapering, the official said spillover effects from U.S. monetary policy were not the only factors at play and structural reforms were needed in some of those countries.

The G20 needs to work together to facilitate the transition toward normal monetary policy, he said.

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