LEADERS of developing countries who are rattled by huge debts have agreed to austerity measures as a path to economic recovery by 2013.
The leaders of 20 major industrial and developing countries reached this agreement at the end of their meeting in Canada. The Associated Press (AP) said that the leaders generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery.
"Serious challenges remain," they cautioned in a closing statement. "While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," according to the document from the Group of 20 major industrial and developing nations.
Obama told a news conference that he was satisfied with the outcome, saying he recognised that countries had to proceed at their own pace in either emphasising growth or budget austerity.
"We can't all rush to the exits at the same time," Obama said after three days of economic summitry.
Summit participants navigated a careful course between Obama's emphasis on growth and fellow leaders such as German Chancellor Angela Merkel who advocated spending cuts and even tax increases.
"Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016," according to the statement. The gross domestic product, or GDP, measures the value of all goods and services, and is considered the best gauge of economic health.
At the same time, the statement called for following through on "existing stimulus plans," heeding Obama's concerns.
Japan was given an exemption from meeting the debt targets because of years of a stagnant economy, and the fact that its huge debt is largely owned by Japanese and not overseas’ investors.
Canadian Prime Minister Stephen Harper, the summit host, told reporters that deficit reduction "is not an end in itself" and that there is "an ongoing role for stimulus in the short term."
As the summit wrapped up, conditions on the streets of Canada's biggest city remained tense.
Police, responding more aggressively than the day before, raided a university campus and rounded up protesters in an effort to quell further violence after youths rampaged through the city the night before, smashing windows and torching police cruisers. Police said they arrested more than 600 demonstrators.
Harper blamed "thugs" for the violence and suggested the destruction and fires on the streets justified the $900 million that Canada spent for summit security.
World leaders also took note of the devastating oil spill in the Gulf of Mexico in their statement, which recognised "the need to share best practices to protect the marine environment, prevent accidents ... and deal with their consequences."
The April 20 explosion on the BP-leased Deepwater Horizon rig unleashed the worst offshore oil spill in U.S. history. BP is London-based and the disaster has contributed to strains between the U.S. and Britain.
Britain's new conservative Prime Minister, David Cameron, told reporters that BP was working hard to cap the well, "clean up the mess" and compensate victims. At the same time, "what we all want is for this important company to be strong and stable for the future," he said.
The G-20 statement limits the deficit-reduction goal to the most industrialised nations and offers governments flexibility on when to start balancing their books.
French President Nicolas Sarkozy pointed out that "France has made even more stringent promises to its European partners on deficit-cutting."
Asked if summits were necessary, Sarkozy admitted that they could be exhausting. "We end these summits empty, tired, but it's our duty to participate," he said.
European countries, in particular, have been rattled by the near-default of Greece on its government debt.
The document doesn't endorse a bank tax advocated by Europe and the U.S. to set up a fund to pay for future bailouts. Canada, Australia and Japan, whose banks did not fail in the crisis, oppose the levy.
Instead, it says all countries should make sure tax-payers are not stuck with the bill when banks fail, and leaves it up to individual countries to decide how they want to do that.
Canada's Harper urged leaders to "send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order." He said global economies needed to walk a "tightrope" between deficit spending this year, ensuring the fragile recovery continues and then switching to deficit reduction programmes.
The G-20 includes the world's major industrial countries — the United States (U.S.), Japan, Germany, France, Britain, Canada, Italy and Russia — plus major developing nations such as China, India and Brazil.
Some countries will find it more difficult than others to meet the new deficit targets.
The United States ran a record deficit of $1.42 trillion last year, or 10 per cent of its GDP. Private economists expect the deficit will decline only slightly to $1.3 trillion this year, which would amount to 9 per cent of GDP
The leaders of 20 major industrial and developing countries reached this agreement at the end of their meeting in Canada. The Associated Press (AP) said that the leaders generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery.
"Serious challenges remain," they cautioned in a closing statement. "While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," according to the document from the Group of 20 major industrial and developing nations.
Obama told a news conference that he was satisfied with the outcome, saying he recognised that countries had to proceed at their own pace in either emphasising growth or budget austerity.
"We can't all rush to the exits at the same time," Obama said after three days of economic summitry.
Summit participants navigated a careful course between Obama's emphasis on growth and fellow leaders such as German Chancellor Angela Merkel who advocated spending cuts and even tax increases.
"Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016," according to the statement. The gross domestic product, or GDP, measures the value of all goods and services, and is considered the best gauge of economic health.
At the same time, the statement called for following through on "existing stimulus plans," heeding Obama's concerns.
Japan was given an exemption from meeting the debt targets because of years of a stagnant economy, and the fact that its huge debt is largely owned by Japanese and not overseas’ investors.
Canadian Prime Minister Stephen Harper, the summit host, told reporters that deficit reduction "is not an end in itself" and that there is "an ongoing role for stimulus in the short term."
Police, responding more aggressively than the day before, raided a university campus and rounded up protesters in an effort to quell further violence after youths rampaged through the city the night before, smashing windows and torching police cruisers. Police said they arrested more than 600 demonstrators.
Harper blamed "thugs" for the violence and suggested the destruction and fires on the streets justified the $900 million that Canada spent for summit security.
World leaders also took note of the devastating oil spill in the Gulf of Mexico in their statement, which recognised "the need to share best practices to protect the marine environment, prevent accidents ... and deal with their consequences."
The April 20 explosion on the BP-leased Deepwater Horizon rig unleashed the worst offshore oil spill in U.S. history. BP is London-based and the disaster has contributed to strains between the U.S. and Britain.
Britain's new conservative Prime Minister, David Cameron, told reporters that BP was working hard to cap the well, "clean up the mess" and compensate victims. At the same time, "what we all want is for this important company to be strong and stable for the future," he said.
The G-20 statement limits the deficit-reduction goal to the most industrialised nations and offers governments flexibility on when to start balancing their books.
French President Nicolas Sarkozy pointed out that "France has made even more stringent promises to its European partners on deficit-cutting."
Asked if summits were necessary, Sarkozy admitted that they could be exhausting. "We end these summits empty, tired, but it's our duty to participate," he said.
European countries, in particular, have been rattled by the near-default of Greece on its government debt.
The document doesn't endorse a bank tax advocated by Europe and the U.S. to set up a fund to pay for future bailouts. Canada, Australia and Japan, whose banks did not fail in the crisis, oppose the levy.
Instead, it says all countries should make sure tax-payers are not stuck with the bill when banks fail, and leaves it up to individual countries to decide how they want to do that.
Canada's Harper urged leaders to "send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order." He said global economies needed to walk a "tightrope" between deficit spending this year, ensuring the fragile recovery continues and then switching to deficit reduction programmes.
The G-20 includes the world's major industrial countries — the United States (U.S.), Japan, Germany, France, Britain, Canada, Italy and Russia — plus major developing nations such as China, India and Brazil.
Some countries will find it more difficult than others to meet the new deficit targets.
The United States ran a record deficit of $1.42 trillion last year, or 10 per cent of its GDP. Private economists expect the deficit will decline only slightly to $1.3 trillion this year, which would amount to 9 per cent of GDP
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