World leaders aim to cut deficits

[newsroom]

Pretoria - Leaders of the world's biggest countries have pledged to halve budget deficits by 2013 and stabilise or reduce government debt by 2016.

The leaders who attended the G20 summit, said their “highest priority is to safeguard and strengthen recovery and lay the foundation for strong, sustainable and balanced growth, and strengthen our financial systems against risks,” the communiqué said adding that "these (actions) will be differentiated and tailored to national circumstances.

The summit, which concluded in the Canadian city of Toronto on Sunday, acknowledged that, after the downturn, the economic recovery varies in pace across the world and a delicate balance is needed between restoring budget discipline and sustaining growth.

"There is a risk that synchronised fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation when necessary would undermine confidence and hamper growth,” it said.

Countries already facing "serious fiscal challenges" should accelerate their budget reductions, the G-20 said.

The leaders also acknowledged coming up short in the effort launched in Pittsburgh to rebalance global growth, saying "we can do much better."

The summit, which saw President Jacob Zuma in attendance, was also attended by leaders of the world’s biggest economies.

Speaking during the plenary session on the reform of the international financial institutions, Zuma said the International Monetary Fund's focus should shift to benefit developing nations as their needs are higher.

Zuma said world leaders should play a greater role in providing strategic direction to the IMF and ensure that an equitable representation is achieved in the Board of the IMF to reflect appropriate regional representation.

"This could be achieved through reforming the composition of the Board as was done at the World Bank, to afford an additional chair for sub-Saharan Africa," he said, adding that this "appointment should be based on merit without regard to nationality or gender”.

To accommodate emerging economies, the G20 also called on the world's emerging economies to allow their currencies to float more freely, so as to balance world trade.

The leaders also sought to keep trade flowing by renewing their pledge to avoid protectionist measures for three years and reach a deal on the Doha round of trade talks. – BuaNews