G20 draft sets out action plan for growth
G20 draft sets out action plan for growth
Updated on Friday, November 04, 2011, 00:41

Cannes: G20 leaders meeting in southern France will spell out an action plan to return the world economy to balanced growth that will include a pledge by Italy to bring down its public debt and deficit, a draft communique showed.

The draft document, dated Nov. 2, says the G20 nations commit to coordinate actions and policies in a plan that is expected to hold countries with large budget deficits to fiscal consolidation and those with trade surpluses to work to boost internal demand.

The final communique will be unveiled on Friday afternoon as the last summit of France`s presidency of the Group of 20 major economies winds up in the Riviera resort of Cannes.

Blanks in the draft document over phrasing on foreign exchange rate policies and on IMF resources suggested those areas were still under discussion, but otherwise the communique contained little that was unexpected as the Cannes meeting was largely eclipsed by the sudden possibility of a Greek exit from the euro zone.

Reflecting the level of anxiety over the risk of a fresh economic crisis, the draft showed the G20 is considering a proposal by the International Monetary Fund to create a new short-term credit line to help countries facing economic shocks beyond their control, a G20 source said.

The grouping is also considering injecting billions of dollars into the global economy through a second special allocation of IMF Special Drawing Rights (SDRs). Such a move should help manage anxiety over the euro zone crisis that is wreaking havoc with stock and bond markets.

French President Nicolas Sarkozy had hoped to use his year as G20 steward to achieve ambitious goals including a rethink of the global financial system and measures to fight commodity price volatility, but has had to scale back his expectations as the crisis that began two years ago in Greece has sucked in other heavy debtors in the bloc.

As Greece`s place in the euro zone hung in the balance on Thursday, the draft communique underlined concerns that if Italy cannot get its finances in order and rapidly introduce pension and other reforms, it could follow Greece, Italy and Portugal in needing a bailout.

"Italy commits to reaching a rapidly declining debt-to-GDP ratio starting in 2012 and a close to a balanced budget by 2013," the draft reads.

"This objective, based on the full implementation of the 60 billion euro fiscal package approved during the summer, will be underpinned by the strengthening of the fiscal rules, stemming from both the European legislation and the introduction in the constitution of the balanced budget rule."

At a European Union summit on Oct. 26, Italy agreed to balance its budget in 2013.

Seeking to tackle the imbalances that set the stage for the 2007-09 crisis, such as the gaping U.S. trade gap and the corresponding surplus in China, the G20 had named seven countries that should take action: the United States, China, Japan, Germany, France, Britain and India.

All 20 are now expected to promise measures, with France set to pledge billions of dollars in budget cuts.

The draft communique showed little progress has been made on France`s initial G20 goal of launching a rethink of the global monetary system. It committed to work towards a system that better reflected emerging economies but gave no time frame.

It also agreed that the composition of the IMF`s SDR basket should be adjusted and broadened over time "to reflect currencies` changing role and characteristics", but made no mention of eventually including the yuan, as France had hoped.

Bureau Report

Your comment(s) on this article
Toolbox
Print this pages E-Mail Bookmark and Share
Post Comment
     
  Name
  Place
  Email
  Comment
TERMS OF USE:
The views represented here are not neccesarily endorsed by www.zeenews.com and its allied websites. All messages will be moderated and no message that has inflammatory, abusive, derogatory language or any language deemed unfit for publication by the editor will be displayed. Though it will be endeavoured that as many messages as possible be displayed, there will be time lag between the submission and publication of the messages. The website reserves the right to publish or reject any message.

more news
Auto Expo ends, next edition may move out of Pragati Maidan
Diesel car boom in India puts automakers in a fix
‘Auto Expo a serious business, not tamasha’
Auto Show: Voices of disappointment over poor mgmt get louder
Harley-Davidson looking beyond Indian metros for growth
Next year`s auto expo may be two days longer
Toyota launches new Prius, price starts at Rs 27.39 lakh
Auto Expo marred by poor crowd mgmt, general visitors hijack Day 2