5 Min Read
MOSCOW, July 19 (Reuters) - Following are key passages of the draft of a communique prepared for a meeting on Friday of finance ministers and central bankers from the Group of 20 economies in Moscow.
This text, seen by Reuters, updates an earlier item with passages where the agreed wording is final. The phrase in square brackets remains subject to review:
1. We the G20 Finance Ministers and Central Bank Governors, met to discuss the current global economic developments and prepare for our Leaders' summit in September.
2. Since we last met, the global outlook has somewhat weakened on account of slower growth in some large emerging market economies and the recession in the euro area. As previously, the global recovery remains fragile and uneven, with unemployment continuing to be high in many countries. A range of factors continue to weigh on global growth prospects, including post-financial crisis deleveraging in the private sector and impaired credit intermediation, fiscal drag and still incomplete rebalancing of global demand, as well as structural impediments to growth in some countries.
In addition, policy uncertainty has recently triggered an increase in financial markets volatility and financial conditions have tightened. This has mostly affected emerging market economies, and some of them experienced a large increase in local bond yields, depreciation of currencies and liquidity pressures against the backdrop of reversing capital flows.
3. To address these challenges and to place the global economy on a path to stronger, more sustainable and more balanced growth, we are building on our recent policy actions by developing a comprehensive St. Petersburg Action Plan.
We agreed that its near-term priority is to boost jobs and growth by further reducing financial market fragmentation and moving decisively towards a banking union in Europe, continuing monetary support where needed, implementing medium-term fiscal strategies [including in the U.S. and Japan], calibrating the pace and composition of fiscal consolidation plans to economic conditions and fiscal space, rebalancing global demand, and taking measures to support growth, stability and resilience in emerging market economies.
We agreed that to boost jobs and growth over the medium term, the St. Petersburg Action Plan must include a comprehensive series of structural reforms that will increase labour force participation, employment and productivity. To this end, we have reviewed our structural reforms agenda and agreed to address the gaps in our commitments with reforms that clearly contribute to our collective objectives of strong, sustainable and balanced growth.
4. Achieving a stronger and sustainable recovery while ensuring fiscal sustainability in advanced economies remains critical. As agreed progress is being made in developing credible, ambitious and country-specific medium-term fiscal strategies for the St. Petersburg Summit. These strategies will be sufficiently flexible, to take into account near-term economic conditions, so as to support economic growth and job creation while putting debt as a share of GDP on a sustainable path.
5. We are determined to continue progress with rebalancing of global demand, which requires internal rebalancing through structural reforms and exchange rate flexibility. We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals and avoid persistent exchange-rate misalignments. We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes. We will resist all forms of protectionism and keep our markets open. Large surplus economies should consider taking further steps to boost domestic sources of growth, while deficit economies should implement measures to improve competitiveness.
6. Monetary policy should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks. We recognise the support that has been provided to the global economy in recent years from accommodative monetary policies including unconventional monetary policies. We remain mindful of the risks and unintended negative side effects of extended periods of monetary easing. Future changes to monetary policy settings will continue to be carefully calibrated and clearly communicated. We reiterate that excess volatility of capital flows and disorderly movements in exchange rates have adverse implications for economic and financial stability.