G-20 nod for 50% budget cuts

TORONTO – World leaders lined up yesterday behind a bold pledge by rich nations to cut budget deficits in half by 2013.Canadian Prime Minister Stephen Harper, host of a summit of the world’s 20 top industrial and developing nations, said at yesterday’s session that it was “imperative that we get our fiscal house in order”.The deficit-cutting goal would mean that countries cut their red ink in half within three years and get their total debt stabilised by 2016.“Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016,” according to a draft communiqué obtained by The Associated Press.Harper told the leaders, assembled in a large conference hall, that the countries needed to walk a “tightrope” between continuing deficit spending this year to provide insurance that the fragile recovery continued but then switching to deficit reduction programmes.The targets that the G-20 countries were moving to adopt had been outlined by Harper in a letter he sent to all leaders earlier this month.His proposal stood in contrast to the priorities outlined by United States President Barack Obama in a competing letter in which he urged the G-20 countries to avoid the costly mistake made during the 1930s in which countries reduced government support too quickly and ended up prolonging the Great Depression.But during the discussions in Canada, it was clear that Obama’s view was in the minority, as country after country stressed the need to reduce deficits. Many nations are worried about the example of Greece, which was plunged into a debt crisis earlier this year. (AP)