UPDATE 1-G20 draft omits G7 reference to economic policy aims

Fri Feb 15, 2013 9:35am EST
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* Doesn't follow key language in this week's G7 statement

* Fiscal language makes allowance for near-term challenges

* Germans want more fiscal discipline; others concerned

MOSCOW, Feb 15 (Reuters) - A draft communique prepared for Group of 20 finance leaders omits part of this week's Group of Seven statement declaring fiscal and monetary policy may only be used for domestic economic aims, a G20 delegate said on Friday.

It will merely stick to previous G20 language on the need to avoid excessive foreign exchange volatility and steer clear competitive devaluations.

The G20 leading economies intend to reaffirm their commitments to draw up credible medium-term fiscal plans but will also make allowances for the short-term economic situation facing some countries, the delegate said after negotiations.

"Everyone's bought into that," the delegate said.

The new emphasis on near-term considerations deferred to the United States and some others whose recoveries are still struggling.

The key paragraphs of the draft hammered out after several hours of talks make no direct mention of fiscal targets, in response to U.S. pressure, nor do they repeat the G7's language pledging not to target certain foreign exchange rates.   Continued...