OTTAWA (Reuters) - World leaders must act more quickly than previously thought to assure markets they will reduce government debt, Canadian Prime Minister Stephen Harper said on Monday.
Speaking to participants in a Canadian youth summit, Harper said the Greek debt crisis and concerns about fiscal health elsewhere highlight the need for the world’s leading economies to address the issue decisively at June’s G20 summit in Toronto.
“We now need to reassure markets not just that we are prepared to intervene when we have to, but that governments can run responsible and sustainable balances over the long term,” Harper said.
“Obviously, markets have a lot of doubt about that ... I think it’s pretty critical that this will have to be addressed and I think it’ll have to be addressed a lot quicker than probably leaders thought six months ago.”
Earlier, Harper said in a statement that he was writing to his fellow G20 leaders to urge they “confront our fiscal challenge with clear and realistic plans for fiscal consolidation, or we can wait for markets to dictate the terms for us.”
Canada is host of next month’s Toronto summit of the G20, a grouping that gathers major developed and emerging economies representing about 80 percent of global gross domestic product.
Canada’s other big push at the summit will be on stronger banking regulation, while firmly resisting efforts to impose a global bank tax.
The Conservative government in Ottawa has long argued that due to stricter rules, Canadian banks did not exploit some of the lucrative dealings that eventually got their U.S. and European counterparts into so much trouble. They therefore did not need bailouts and it would be unfair to tax them now, Canada says.
“We know what has to be done. You have to have a strong system of prudent and active regulation,” Harper said.
Other G20 members in the developing world agree with Ottawa on the issue, Harper suggested.
“I think we will be very strongly supported in that ... many emerging economies also did not contribute to the financial crisis,” he said.
Canada will escalate its call for the G20 to follow through on promised financial regulatory reforms through co-ordinated speeches in four different cities around the world on Tuesday, a government official said.
Finance Minister Jim Flaherty will speak in Mumbai, and three other cabinet ministers will deliver similar messages in Shanghai, Washington and Ottawa throughout the day.
Even while tackling issues for the post-crisis era, Harper repeated Canada’s position that major nations need to properly implement stimulus plans to prevent the world from slipping back into crisis, saying the economy recovery was “extremely fragile” in some countries.
Harper also said the G20 should be “looking to countries with high savings to provide greater support for demand” -- a clear reference to China, which is under pressure to let its currency strengthen to help the global economy.
Reporting by David Ljunggren; editing by Rob Wilson