27 September 2009
G20 Nations to Maintain Stimulus Plans Until Recovery Is Assured
Washington — Leaders of the Group of 20 advanced economies agreed to measures to restore the damaged global economic system, and also agreed to maintain current stimulus measures until a full recovery is assured.
The G20 nations also agreed to make the G20 the premier forum for international economic cooperation, supplanting the older Group of Eight major economies — Britain, Canada, France, Germany, Italy, Japan, Russia and the United States. And the leaders pledged to conclude the long-running world trade talks designed to liberalize the global trading system, which have come to be called the Doha round.
“In the short term, we must continue to implement our stimulus programs to economic activity until recovery clearly has taken hold,” the G20 leaders said in a final communiqué issued September 25. “We also need to develop a transparent and credible process for withdrawing our extraordinary fiscal, monetary and financial-sector support, to be implemented when recovery becomes fully secured.”
In an effort to balance the global economic system, the G20 agreed that member nations with sustained, significant trade deficits should undertake policies to support private savings while keeping open markets and strengthening export sectors. G20 nations with sustained and significant trade surpluses pledged to strengthen domestic sources of growth by increasing investment, reducing market distortions, boosting productivity, improving the social safety net for their citizens, and lifting constraints imposed on growth, the communiqué said.
“Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets,” the leaders said. “Industrial output is now rising in nearly all our economies. International trade is starting to recover. Our financial institutions are raising needed capital, financial markets are showing a willingness to invest and lend, and confidence has improved.”
President Obama said the London G20 Summit six months ago marked a significant turning point in the G20’s effort to prevent global economic catastrophe. “Here in Pittsburgh, we’ve taken several significant steps forward to secure our recovery and transition to strong, sustainable and balanced economic growth,” Obama said.
He said the G20, whose membership includes advanced and fast-growing economies, brought the global economy back from the brink and laid the groundwork for long-term prosperity.
The G20 leaders gathered for a two-day summit to address efforts to rein in compensation for bank and securities executives, strengthen international financial regulations, and build a more balanced global economy. The Pittsburgh Summit is the third meeting of the leaders in less than a year.
The group met in November last year as the economic recession was worsening, then the leaders held a similar summit in London in April at a time when the global economy seemed to be crashing in the worst economic recession since the 1930s.
Obama said the world leaders who gathered in Pittsburgh to take stock of where the economy stands now and to assess the way forward have agreed to keep recovery plans in place until growth is restored, and also set a new framework for prosperity in its place.
“Our coordinated stimulus plans played an indispensable role in averting catastrophe. Now we must make sure that when growth returns, jobs do too,” Obama said at a final press conference September 25. “That’s why we will continue our stimulus efforts until our people are back to work, and phase them out when our recovery is strong.”
The leaders, Obama said, also agreed to develop tough financial regulations to reduce the threat of similar economic crises happening again. “We will bring more transparency to the derivatives market,” he said. “And we will strengthen national capital standards, so that banks can withstand losses and pay for their own risks.”
Obama said tools will be created to hold large global financial firms accountable and to manage failures without placing further burdens on taxpayers.
The G20 Summit leaders agreed to phase out fossil fuel subsidies, which now total nearly $300 billion globally.
“We agreed to reform our system of global economic cooperation and governance,” Obama said. “To make our institutions reflect the reality of our times, we will shift more responsibility to emerging economies within the International Monetary Fund, and give them a greater voice.”
Obama said that to build new markets, and to help the world’s poorest climb out of poverty, the G20 leaders established a new World Bank Trust Fund to support investments in food security and financing for clean and affordable energy.
“At the G20, we’ve achieved a level of tangible, global economic cooperation that we have never seen before, while also acting to address the threat posed by climate change,” he said.
What foreign affairs decisions should President Obama consider? Comment on America.gov’s blog Obama Today.
