AFP/Washington
The Group of 20 economic powers has pledged “ambitious” steps to spur growth and job creation to get the crisis-scarred global economy back on track.
After talks in Washington that a US official said focused much on the stagnation in Europe, the financial leaders of the world’s biggest economies said the major crises had been overcome but growth was “too weak” and unemployment “too high”.
The G20 “reaffirmed our determination to raise growth and create jobs,” the group said in a statement following their discussions on the sidelines of the International Monetary Fund and World Bank spring meetings.
They said the global economy was held back by uncertain government policies, still-heavy private and public debt loads, impaired bank lending and “incomplete re-balancing” of global demand — a push on surplus G20 member economies like Germany and China to stimulate more local demand.
“We have agreed that while progress has been made, further actions are required to make growth strong, sustainable and balanced,” said the group, which accounts for 90% of global output.
“We will continue to implement ambitious structural reforms to increase our growth potential and create jobs.”
Among the steps needed is strengthening the eurozone’s economic and monetary situation, “including through an urgent movement toward banking union” and bolstering banks’ balance sheets.
But the G20 also urged the US and Japan, both undertaking strong efforts to expand domestic demand, to quickly fashion “credible” medium-term plans for reeling in their huge debt and deficit loads.
They gave a cautious endorsement of Japan’s huge monetary stimulus programme, agreeing it was necessary to boost the country’s stagnant economy. Japan’s latest policy actions “are intended to stop deflation and support domestic demand,” they said.
A senior US Treasury official, speaking on condition of anonymity, said that Japanese officials had stressed how the monetary moves would lift demand in the world’s third-largest economy, which has been struggling for two decades.
That came as many countries, including the US, have expressed concern that Japan could be deliberately trying to force the yen lower to boost exports and cut imports via “competitive devaluation.”
“The latest (Japanese) decision on quantitative easing remedies the situation that was building up for years,” Russian Finance Minister Anton Siluanov, chair of the G20 meeting, told reporters.
As a group, the G20 pledged not to compete on the currency front.
“We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes, and we will resist all forms of protectionism and keep our markets open,” they said.
Siluanov, whose country currently holds the G20 presidency, said there was strong debate over setting deficit and debt targets.
“We all agreed there’s no need to set hard targets,” he said, but medium-term “soft” parameters could be set. Members had agreed to weigh that at the next G20 summit, in July.
The group called for the global adoption of standards for sharing bank account information in an effort to fight tax evasion and curtail banking secrecy.
The G20 said they “strongly encourage” all countries to sign on to a commitment to the automatic exchange of banking information “which is expected to be the standard,” in the group’s strongest endorsement yet of a move that takes aim especially at tax havens like Switzerland.
“More needs to be done to address the issues of international tax avoidance and evasion, in particular through tax havens, as well as non-co-operative jurisdictions,” it said.
Meanwhile, the G20 also said they were committed to reforming IMF quotas, which will give more say in the institution to emerging economies like China.
Completing the reforms “is indispensable for enhancing its (the IMF’s) credibility, legitimacy and effectiveness.”
No mention was made of the US, whose ratification of the 2010 reforms is essential to their implementation. The US Congress has blocked the ratification.
