June 28, 2010 07:42
Leaders of the Group of 20 meeting in Toronto, Canada are headed toward a final declaration calling for the world's developed industrial countries to cut deficits by half within three years. Leaders are expected to agree to a deficit-reduction timeline, but will allow for a slower approach by some members.
Addressing G20 leaders, Canadian Prime Minister Stephen Harper said a fragile global economy still needs stimulus, but nations must move on a specific timeline to bring down deficits. To sustain recovery, he said nations must follow through on stimulus plans they committed to during the last summit in Pittsburgh, adding that shaky markets are sending a message for balanced and coordinated actions.
G20 nations are walking a "tightrope", said Harper, requiring them to follow through on existing plans, but also send a clear message that as stimulus measures expire they will focus on getting their fiscal houses in order. "We should agree that deficits will be halved by 2013," he said. "We should also agree that government debt to GDP ratio should be stabilized by 2016 at the least or put on a downward path."
A major point of tension at the G20 summit, and at the G8 meetings before it, has been over how long to sustain robust stimulus spending to ensure growth. President Barack Obama argued that any early slowing of stimulus might bring about a second global recession.
As the G20 summit began on Saturday, U.S. Treasury Secretary Tim Geithner predicted that leaders would strike the right balance between stimulus and restraint, but reiterated U.S. concern over withdrawing stimulus too quickly. "Our capacity to make sure that we are growing in the future and that we moving our fiscal positions back to a sustainable balance depends on our success in definitively repairing the damage caused by the crisis," he said.
German Chancellor Angela Merkel has said sustainable growth need not conflict with austerity measures some governments are implementing.
After talks Saturday with British Prime Minister David Cameron, Obama said the U.S. and Britain have "differentiated responses," but both aim for long-term sustainable growth that puts people to work. On Obama's schedule are bilateral meetings with India's Prime Minister Manmohan Singh and Japan's Prime Minister Naoto Kan, following an early session with Indonesian President Susilo Bambang Yudhoyono.
Obama expressed regret at having to twice postpone a planned visit to Indonesia, noting that the Indonesian leader had graciously re-extended the invitation to visit the world's most populous Muslim nation. Obama holds a news conference at the conclusion of the G20, before heading back to Washington where, among other things, he will be awaiting final action by the U.S. Congress on sweeping financial reform legislation.
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