Leaders of the G-20 group have agreed to set targets for reducing budget deficits and increasing banks’ mandatory capital levels, once their economic recovery solidifies, according to a draft final statement from their summit in Toronto shared with journalists.
Advanced economies aim to halve deficits by 2013 and stabilize the public debt-to-GDP ratio by 2016. In the 22-page draft final statement, the G-20 states that banks must “significantly” increase mandatory capital, and countries will be allowed to align with the new rules with the goal of meeting new standards by the end of 2012, Canadian electronic media report. “Honestly, this is more than I expected, as it is quite concrete,” said German Chancellor Angela Merkel, speaking about the fiscal targets. “The success is that industrialized countries as a group accepted this,” she added.
The G-20 also promised to maintain existing plans to stimulate the economy and undertake “coordinated actions” to sustain the pace of economic recovery. Recent events highlight the need to establish “appropriately coordinated” plans to rein in deficits, the draft states. Emerging economies have pledged to take measures to strengthen the social safety net, boost consumption infrastructure, and improve exchange rate flexibility, it adds. The draft statement includes targets advocated by the summit host, Canadian Prime Minister Stephen Harper, attempting to bridge the differences between the U.S. and Europe by proposing minimum targets for reducing deficits and debt. The leaders of the 20 largest world economies, in their final statement in Toronto, also called for a “gradual, medium-term, elimination of subsidies for inefficient fossil fuels, which encourage their wasteful consumption, taking into account vulnerable groups and development needs.” This part of the statement was included at the insistence of the U.S., instead of the earlier, watered-down formulation that envisioned a “voluntary approach, according to the specifics of member states,” sources said.
