JAPAN GETS DEBT REDUCTION EXEMPTIONHow does Japan, the number 1 most indebted of the G20 countries at an estimated 2010 Gross Public Debt-To-GDP ratio of 227%, get an exemption from the G20 debt reduction plan?
TORONTO - G20 leaders have agreed on a Canadian-led plan to cut deficits and stabilize the world economy.
A leaked draft of the final G20 Summit communique shows that advanced economies have committed to cutting their deficits in half by 2013, and putting debt loads on a stable or downward path by 2016.
"While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," the leaders say in their preamble.
"Strengthening the recovery is key."
Japan gets an exemption to the deficit plan because of special circumstances. And countries that are carrying dangerous debt loads need to act sooner.
"We are committed to taking concerted actions to sustain the recovery, create jobs and to achieve stronger, more sustainable and more balanced growth," the communique says. "These will be differentiated and tailored to national circumstances."
The draft stresses repeatedly that implementation of the guidelines is up to national governments and they should take action that is appropriate for domestic economies. Those words are meant to soothe the concerns of some countries who see the G20 as an infringement on sovereignty.
The G20 deal also commits emerging countries to greater exchange rate flexibility, although it doesn't mention China by name.
And the pact says emerging markets should strengthen social safety nets and reduce their dependence on exports.
On the bank tax that Prime Minister Stephen Harper has spent months lobbying to wipe off the G20 agenda, the wording favours Canada. The countries agree that taxpayers should not have to pay the cost of banks that fail, but it leaves countries to decide how to do that.
"We recognized that there are a range of policy approaches to this end," the communique says. "Some countries are pursuing a financial levy. Other countries are pursuing different approaches."
The G20 Summit went off smoothly Sunday after a night of violence that saw roving bands of militants smashing downtown shop windows, and even setting police cruisers on fire.