TEXT-Geithner’s letter to G20

GYEONGJU, South Korea, Oct 22 (BestGrowthStock) – Following is thea
text of the main points of a letter sent to G20 finance leaders
meeting in South Korea, a copy of which was seen by Reuters.

“First, G-20 countries should commit to undertake policies
consistent with reducing external imbalances below a specified
share of GDP over the next few years, recognizing that some
exceptions may be required for countries that are structurally
large exporters of raw materials. This means that G-20 countries
running persistent deficits should boost national savings by
adopting credible medium-term fiscal targets consistent with
sustainable debt levels and by strengthening export performance.
Conversely, G-20 countries with persistent surpluses should
undertake structural, fiscal and exchange rate policies to boost
domestic sources of growth and support global demand. Since our
current account balances depend on our own policy choices as well
as on the policies pursued by other G-20 countries, these
commitments require a cooperative effort.

“Second, to facilitate the orderly rebalancing of global
demand, G-20 countries should commit to refrain from exchange
rate policies designed to achieve competitive advantage by either
weakening their currency or preventing the appreciation of an
undervalued currency. G-20 emerging market countries with
significantly undervalued currencies and adequate precautionary
reserves need to allow their exchange rates to adjust fully over
time to levels consistent with economic fundamentals. G-20
advanced countries will work to ensure against excessive
volatility and disorderly movement in exchange rates. Together
these actions should reduce the risk of excessive volatility in
capital flows for emerging economies that have flexible exchange
rates.

“Third, the G-20 should call on the IMF to assume a special
role in monitoring progress on our commitments. The IMF should
publish a semiannual report assessing G-20 countries progress
toward the agreed objectives on external sustainability and the
consistency of countries’ exchange rate, capital account,
structural, and fiscal policies toward meeting those objectives.”

“With progress on these fronts, we should reach final
agreement in an ambitious package of reforms to strengthen the
IMF’s financial resources and its financial tools, and to reform
the governance structure to increase the voice and representation
of dynamic emerging economies.”

(G20 Newsroom; +82 54 744 8461))

TEXT-Geithner’s letter to G20