German Finance Minister Wolfgang Schaeuble said Group of 20 finance chiefs agreed today in Moscow to stick to deficit-reduction pledges made by their leaders almost three years ago and to pursue a follow-up plan by September, when top policy makers meet again in St. Petersburg.
There is a “clear commitment” by the G-20 to honor promises made in the past, especially regarding the “Toronto commitments” from June 2010, Schaeuble told reporters after a two-day meeting of G-20 finance ministers and central bank governors.
The G-20 will “stand by what was agreed at the G-20 summit in Los Cabos, namely to agree on a follow-up solution to the Toronto commitments by the next G-20 summit in St. Petersburg,” Schaeuble said. “We all agree that a credible medium-term reduction in the too-high deficits and debt is absolutely necessary, especially for the advanced economies.”
The finance minister of Europe’s biggest economy came to Moscow hoping for a “concrete” follow-up agreement to a G-20 goal set in Toronto in 2010 that’s been missed by countries including the U.S. and the U.K. Undersecretary Lael Brainard, representing the U.S. Treasury in Moscow, said the G-20’s priority should be to find ways to strengthen economic growth.
Assessing the appropriate stance of fiscal policy has caused rifts between the major economies since the global financial crisis began in 2007. Recovery has proved much slower than was anticipated in Toronto, Organization for Economic Cooperation and Development Secretary General Angel Gurria said in Moscow.
Leaders agreed in Toronto to halve their budget deficits by this year and stabilize debt by 2016. Schaeuble has said expressions of intent to consolidate budgets are important to restore investor confidence in governments’ ability to repay their debts.
The finance chiefs already watered down their Toronto agreement after November talks in Mexico City, saying they would ensure “the pace of fiscal consolidation is appropriate to support recovery.”