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BRUSSELS (Reuters) - The world's financial leaders will agree this week to be more ambitious with structural reforms to boost global growth after draft plans showed them falling short, an official involved in preparations for a G20 meeting said.
Finance ministers and central bank governors from the world's 20 biggest economies (G20) will meet on Thursday in Washington to review progress on a deal to raise the world's economic growth through reforms of labor markets, trade, investment and making industry more competitive.
All 20 countries have already submitted sketches of the reforms they want to introduce for the scrutiny of the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD).
The target is to boost global output by an extra 2 percent over 5 years - but the sketches showed the countries falling short.
"A first assessment ... showed that the level of ambition was insufficient and that final growth strategies should deliver significantly more in terms of structural reforms in order to live up to the commitments taken by the G20 in Sydney," European Union finance ministers said in a document prepared for the G20.
"More ambitious and meaningful commitments in the agreed priority areas: investment, employment and trade and competition... need to figure in the preliminary growth strategies which are due by May 2," said the document, seen by Reuters.
The reform plans need to be quite specific because the OECD and the IMF should be able to quantify them, the official said, although in some cases quantification can prove difficult.
"G20 ministers will recognize the sketches are not able to produce the 2 percent extra growth and they will give a mandate to their officials to add new measures in order to try to reach 2 percent," the G20 official said.
"They will say that in the growth strategies there must be a further collective effort to proceed in terms of structural reforms," he said.
Once the revised plans are in, each G20 country will review the ideas of two of its peers, looking for weaknesses.
"The point of the peer review is to push further the level of ambition," the G20 official said.
Reviewed and amended plans will be submitted to G20 finance ministers at their meeting in September and then approved by G20 leaders at their summit in November.
The discussion on growth strategies is the main item on the ministers' agenda together with a discussion on ways to limit the negative spillover effects on the world economy from withdrawing the extraordinary monetary stimulus in the U.S.
"There will be scenarios to see different types of monetary adjustment spillovers in a more benign scenario and less benign scenario," the G20 official said.
"That will trigger a discussion among ministers what are the appropriate measures to avoid the less benign scenario."
Monetary policy in the euro zone, which faces a prolonged period of low inflation, is likely to be discussed.
Unlike the Federal Reserve, which wants to withdraw its extraordinary stimulus to the economy, the European Central Bank is considering such a stimulus to prevent the risk of deflation.
"I would expect that this could come up in the general discussion where there will be normalization of monetary policy," the official said.
"I don't expect it will be a key issue, but it is likely that some will raise the question if more should be done in terms of euro zone monetary policy."
"Some can mention it in the discussion. Japan has warned us twice... that this is a risk that has to be taken seriously. But I don't see this as a major concern of countries such as China, Brazil or India for whom the problem is capital volatility," the official said.
The European Central Bank said last week it was ready to start asset purchases, also known as quantitative easing, to tackle inflation if it proved persistently low.
Editing by Jeremy Gaunt