Toronto's statement warns of falling back into recession trap
Requesting countries to balance between budgets control and the recovery support
A group photo at the G-20 Summit in Toronto yesterday
G-20 Leaders concluded their final statement issued partly, after the meeting held in Toronto yesterday, agree on the need to strengthen the economic recovery and reducing the level of government debt, after having succeeded in overcoming the global recession.
Agreeing to disagree and abandoning the endeavor to have a common approach, leaders of the G20 nations agreed to have "differentiated response" in the economic crisis the world is facing currently.
Furthermore; G20 leaders agreed to aggressive deficit-cutting targets, yet allowed the respective countries to pursue their own approach in meeting their national objectives.
This was an apparent trade-off between US President Barack Obama, who favored continued economic stimulus spending to head off a double-dip recession, and the European leaders led by German Chancellor Angela Merkel, who wanted G20 countries to move swiftly to reduce debts run up during the 2008-09 economic slowdowns.
"Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016". This was a compromise between the two positions as Obama had publicly expressed his concern that cutting stimulus spending too quickly could hurt the global recovery. The leaders also agreed on supporting the economic growth policies and recognized that some countries will start cutting their budget deficits later than others.
"We are committed to taking concerted actions to sustain the recovery, create jobs and to achieve stronger, more sustainable and more balanced growth," the communiqué said. "These (actions) will be differentiated and tailored to national circumstances.".
Bank tax choice left to individual nations to decide whether they want to impose a bank tax or establish some kind of a rainy day fund to offset another financial collapse that sparked the worldwide recession.
The final communiqué emphasized the need to phase them out over time "based on national circumstances" and "taking into account vulnerable groups and their development needs.".
Leaders also called on the world's emerging economies to allow their currencies to float more freely, so as to balance world trade.
Saudi Arabia's participation in the G20 summit reflects its strong position in the world, Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz, is leading the Kingdom's delegation to the summit.
The Canadian Prime Minister Stephen Harper has laid out the challenge that confronted them, urging them to take decisive action on mounting national debts and warning that failure to act could derail a fragile recovery, he also underlined the need to strike a proper balance between sustaining economic growth and pulling back fiscal deficits.
Barack Obama's in a discussion with Saudi Foreign Minister Prince Saud al-Faisal said during the closing session of the summit yesterday.
On the other hand, The Brazilian Finance Minister Guido Mantega has confirmed yesterday on the process of controlling budgets by European countries at the expense of emerging countries. Mantega who is leading the Brazilian delegation to the summit in the absence of President Luiz Inácio Lula da Silva said through a press conference that adjustments of reducing the public deficit must be realistic otherwise it will stifle the growth.. adding that the worse thing is to apply these economic policies in developed countries.
"The recent skittishness of markets is telling us they are awaiting our actions, actions that must be decisive but also coordinated and balanced," Harper said. "Here is the tightrope that we must walk, to sustain recovery it is imperative that we follow through on our existing stimulus plans," also adding that advanced countries must send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order," he underlined.
As the leaders debated key issues at the convention center, outside police arrested more than 500 people in a major crackdown in two areas. About 70 people were arrested at a University of Toronto building near Russell Street and Spadina Avenue for wielding "street-type weaponry," police said. Officers seized black clothing, bricks, bats, sharpened sticks and bottles. Raids were carried out at the Bancroft Building, the Earth Science Center and the Graduate Students Center.
U.S. President Barack Obama in his weekly radio speech yesterday said: 'I hope that we can make the progress we have made over the previous summit held last year through the coordinating the global financial reform ... So as to ensure non-recurrence of such crisis in which we are still in the process of recovering it.