A durable economy must include budget responsibility: Obama
Thursday, 22 July 2010
Merle David Kellerhals
LEADERS from the world's largest economies pledged to reduce their budget deficits by half by 2013, and President Obama argued that a durable economic recovery must also include fiscal responsibility.
"In the United States, I've set a goal of cutting our deficit in half by 2013," Obama said at a press conference June 27 in Toronto, Canada. "A number of our European partners are making difficult decisions, but we must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today."
According to the U.S. Treasury Department, the US deficit in the last fiscal year was $1.42 trillion, or about 10 per cent of the nation's gross domestic product (GDP), and most economists estimate the federal deficit will decline slightly in this fiscal year to approximately $1.3 trillion.
Many of the most advanced economies - including that of the United States - chose to implement stimulus measures to reduce and shorten the most severe effects of the worldwide recession, which began in December 2007 and is widely regarded as the worst since the Great Depression of the 1930s. The global economic crisis began to subside by mid-2009, though recovery remains fragile and severe disruptions could reverse the growth trend.
"Globally, economic contraction has given way to economic growth," Obama said during the post-summit press conference. "Trade that had plummeted is rebounding."
The Group of 20 leading economies held a two-day summit in Toronto, June 26-27, immediately after the Group of Eight most advanced economies met, June 25-26, at a Canadian resort outside of Toronto. The next G20 summit will be held in Seoul, South Korea, November 11-12.
The G8 advanced economies, formed in 1975, are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States. The G20, formed in 1999, are the G8 members plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the European Union.
"Emerging economies in particular are seeing impressive growth. So we have pulled ourselves back from the brink and begun to move forward with economic recovery," Obama said.
Obama had been concerned that withdrawing stimulus measures too soon could weaken the recovery, which is seen as uneven and fragile as unemployment levels in many nations still remain at unacceptably high levels. The G20 countries acknowledged in a final summit declaration that to sustain the recovery, a concerted effort is necessary to follow through on existing stimulus plans, while at the same time working to create the conditions for "robust private demand" to take over the economic recovery.
The G20 nations called for programs to foster sustainable public finances and cited the need for nations to reduce by half their budget deficits by 2013 and stabilize or reduce government debt by 2016 in relation to their gross domestic product levels. Gross domestic product levels are the broadest measures of the total value of a nation's goods and services.
Obama told reporters that for a nation to have a durable economic recovery, it must also practice fiscal responsibility. "We agreed to balance the need for continued growth in the short term and fiscal sustainability in the medium term," he added.
The G20 also committed to advancing financial reform, and that included stronger regulation of the world's financial markets, which is part of a greater effort to balance the global economy and reduce sharp swings in economic activity, also known as the "boom-to-bust cycle."
The United States finished final debate on financial reform legislation before the US Congress recesses for the national July 04 holiday, completing work by the Senate and House of Representatives on legislation.
"To maintain momentum, we directed our teams to finalize for our meeting in Seoul a global framework to ensure that banks hold enough capital to withstand the stresses of government intervention," Obama told reporters. "Excessive risk-taking and abusive practices must be prevented."
In addition to reducing budget deficits by 2013, the G20 nations also reaffirmed a commitment to phasing out fossil fuel subsidies to encourage energy conservation, improve global energy security, reduce economically inefficient burdens on national budgets and take a major step in reducing climate-altering greenhouse gas emissions.
The G20 agreed to lead efforts to combat corruption through full implementation of the U.N. Convention against Corruption, and announced the creation of a high-level experts group to develop a full program for consideration at the November G20 Summit.
This is a product of the Bureau of International Information Programs, US Department of State. Courtesy: The US Embassy in Dhaka
LEADERS from the world's largest economies pledged to reduce their budget deficits by half by 2013, and President Obama argued that a durable economic recovery must also include fiscal responsibility.
"In the United States, I've set a goal of cutting our deficit in half by 2013," Obama said at a press conference June 27 in Toronto, Canada. "A number of our European partners are making difficult decisions, but we must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today."
According to the U.S. Treasury Department, the US deficit in the last fiscal year was $1.42 trillion, or about 10 per cent of the nation's gross domestic product (GDP), and most economists estimate the federal deficit will decline slightly in this fiscal year to approximately $1.3 trillion.
Many of the most advanced economies - including that of the United States - chose to implement stimulus measures to reduce and shorten the most severe effects of the worldwide recession, which began in December 2007 and is widely regarded as the worst since the Great Depression of the 1930s. The global economic crisis began to subside by mid-2009, though recovery remains fragile and severe disruptions could reverse the growth trend.
"Globally, economic contraction has given way to economic growth," Obama said during the post-summit press conference. "Trade that had plummeted is rebounding."
The Group of 20 leading economies held a two-day summit in Toronto, June 26-27, immediately after the Group of Eight most advanced economies met, June 25-26, at a Canadian resort outside of Toronto. The next G20 summit will be held in Seoul, South Korea, November 11-12.
The G8 advanced economies, formed in 1975, are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States. The G20, formed in 1999, are the G8 members plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the European Union.
"Emerging economies in particular are seeing impressive growth. So we have pulled ourselves back from the brink and begun to move forward with economic recovery," Obama said.
Obama had been concerned that withdrawing stimulus measures too soon could weaken the recovery, which is seen as uneven and fragile as unemployment levels in many nations still remain at unacceptably high levels. The G20 countries acknowledged in a final summit declaration that to sustain the recovery, a concerted effort is necessary to follow through on existing stimulus plans, while at the same time working to create the conditions for "robust private demand" to take over the economic recovery.
The G20 nations called for programs to foster sustainable public finances and cited the need for nations to reduce by half their budget deficits by 2013 and stabilize or reduce government debt by 2016 in relation to their gross domestic product levels. Gross domestic product levels are the broadest measures of the total value of a nation's goods and services.
Obama told reporters that for a nation to have a durable economic recovery, it must also practice fiscal responsibility. "We agreed to balance the need for continued growth in the short term and fiscal sustainability in the medium term," he added.
The G20 also committed to advancing financial reform, and that included stronger regulation of the world's financial markets, which is part of a greater effort to balance the global economy and reduce sharp swings in economic activity, also known as the "boom-to-bust cycle."
The United States finished final debate on financial reform legislation before the US Congress recesses for the national July 04 holiday, completing work by the Senate and House of Representatives on legislation.
"To maintain momentum, we directed our teams to finalize for our meeting in Seoul a global framework to ensure that banks hold enough capital to withstand the stresses of government intervention," Obama told reporters. "Excessive risk-taking and abusive practices must be prevented."
In addition to reducing budget deficits by 2013, the G20 nations also reaffirmed a commitment to phasing out fossil fuel subsidies to encourage energy conservation, improve global energy security, reduce economically inefficient burdens on national budgets and take a major step in reducing climate-altering greenhouse gas emissions.
The G20 agreed to lead efforts to combat corruption through full implementation of the U.N. Convention against Corruption, and announced the creation of a high-level experts group to develop a full program for consideration at the November G20 Summit.
This is a product of the Bureau of International Information Programs, US Department of State. Courtesy: The US Embassy in Dhaka