G-20 calls for better govt finance management

Busan, June 5 (PTI) With sovereign debt crisis hitting
the recovery process in some parts of Europe, the G-20 finance
ministers resolved to put government finances in better shape
as high debts could derail the growth process.
The joint communique, issued at the end of the two-day
G-20 finance ministers meet here Saturday, did not explicitly
mention the contentious issue of global bank tax to fund
future bailouts, but called for contribution from financial
sector players to the measures taken by governments to prop up
sagging economies.
The grouping of 20 developed and developing countries
highlighted the need to rein in high fiscal deficits of
governments as they are making financial markets volatile.
However, it cautioned that the measures to control fiscal
deficits and prop up growth should be customised.
"The recent volatility in financial markets reminds us
that significant challenges remain...The recent events
highlight the importance of sustainable public finances and
the need for our countries to put in place credible,
growth-friendly measures to deliver fiscal sustainability,
differentiated for and tailored to national circumstances,"
the communique said.
It further said the countries with high fiscal deficit
should speed up the process of reining the gap between
government expenditure and receipts.
Indian finance minister Pranab Mukherjee said the
countries with high fiscal deficits should start announcing
exit from stimulus measures now, while others can stagger it
for a while.
"Those countries that have market compulsions may need to
start the consolidation now. Others can stagger in fiscal
consolidation," Mukherjee said at the meeting.
As the financial meltdown was the key cause of global
economic crisis, the communique called for accelerating
financial repair and reforms. "We agreed further progress on
financial repair is critical to global recovery. It requires
greater transparency and further strengthening of banks'
balance sheets and better corporate governance of financial
firms," the communique said.
However, with India, Australia and Canada opposed to the
idea of global bank tax, the issue was not directly referred
to in the communique. But it said, "the financial sector
should make a fair and substantial contribution towards paying
for any burdens associated with government interventions,
where they occur, to repair the banking system or fund
resolution."
The communique also supported New Delhi's stand on
prudential regulation on financial markets, saying "(we are)
committed to improve transparency regulation and supervision
of hedge funds, credit rating agencies, and OTC derivatives."
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