Canada wants G20 to set tough new fiscal targets

Fri Jun 18, 2010 3:24pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada will ask the G20 to agree to tough new fiscal targets at a summit next week, but said the job of tackling debt should only start once the global recovery is assured.

Prime Minister Stephen Harper sent a letter to his G20 counterparts on Thursday proposing they agree to cut deficits in half by 2013 and stabilize or start reducing debt-to-GDP ratios by 2016, a senior aide to Harper told reporters on Friday.

Canada, which hosts the G8 and G20 summits next week, said countries should fully implement their fiscal stimulus plans but should start the process of fiscal consolidation by next year at the latest.

The proposed targets are mostly aimed at advanced countries and will require substantial effort by some, while many emerging economies are already well positioned, officials said in a briefing with reporters.

"The lesson here is that particularly the advanced countries with higher deficits need to get their fiscal houses in order, but there is a balance to be achieved here between sustained recovery and getting deficits down," the official said.

"A lot of countries will get there sooner, including Canada," he said.

Asked if some countries would not find Harper's targets too onerous, the official replied: "They will have plans to end the stimulus, which will cut their expenditures. And furthermore our nations are recovering, so the revenues will climb and the expenditures will be cut."

A unified position on sovereign debt levels is an attempt to soothe markets still on edge over the Greek debt crisis and big deficits elsewhere in Europe.   Continued...

<p>Canada's Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Parliament Hill in Ottawa June 16, 2010. REUTERS/Chris Wattie</p>