MOSCOW – Leaders from the world’s top 20 economies have made progress when it comes to balancing fiscal discipline and economic growth, Finance Minister Jim Flaherty said after the latest G20 meeting.
Flaherty said Saturday he’s pleased by the G20 leaders’ pledge to adopt “credible, medium-term fiscal strategies” in line with their past commitments by the group’s next meeting in September.
“Too often this discussion has led to a false dichotomy between fiscal discipline and a pro-growth agenda. The bottom line is we need to strike the right balance,” he said in a conference call following the two-day summit in Moscow.
But he stressed it will take persistent effort to stabilize the global economy.
“The global uncertainty and the continuing fragility in Europe and the U.S. in particular remain a challenge to all of us, so we need to follow through on our past commitments in order to secure a strong recovery and strengthen the international financial and regulatory systems,” he said.
The G20 meeting was taking place amid speculation of a “currency war” in which countries devalue their currencies to gain a competitive edge.
It ended with a joint communique that included a promise that the G20 members would “refrain from competitive devaluation” and “resist all forms of protectionism and keep our markets open.”
The move came days after the the Group of Seven leading industrial nations warned that volatile movements in exchange rates can adversely affect the global economy.
The statement from the G7 group, which includes Canada, also affirmed their commitment to exchange rates determined by the markets and not government policy.
Bank of Canada governor Mark Carney also warned this week that the Canadian economy would suffer in a currency exchange war.
The Japanese yen has been the currency primarily in focus. It fell to a 21-month low against the U.S. dollar this week and a near three-year trough against the euro.
Japan, the world’s third-largest economy, faces charges that it is trying to lower the value of the yen to stimulate its economy.
-By Paola Loriggio in Toronto
-With files from The Associated Press