LDALL G20 2 LST

To address the concerns of several emerging economies
like India, facing flush of funds in their stock markets, the
declaration agrees to strengthen global financial safety nets.
It has also asked the advanced economies, including those
with reserve currencies, to be "vigilant against excessive
volatility and disorderly movements in exchange rates."
The declaration said these steps will help mitigate the
risk of excessive volatility in capital flows that is faced by
some emerging countries.
India, for instance, has seen rush of inflows from
foreign institutional investors to the extent of USD 38
billion from January to November 11, this year.
In his plenary speech, Prime Minister Manmohan Singh said
that the countries with currency reserves "have a special
responsibility to ensure that their monetary policies do not
lead to destabilising capital flows, which can put pressure on
emerging markets."
The country's exporters are already starting to feel the
pinch of rupee appreciation on account of FII inflows. The
rupee value has risen by over 5 per cent since January,
reducing the net realisation for exporters.
Singh, however, said there is a strong case for
supporting long term capital flows to the developing countries
especially in infrastructure.
India's concerns on fiscal consolidation in the advanced
countries running big deficits got reflected in the
declaration.
"Advanced economies will formulate and implement clear,
credible, ambitious and growth friendly medium term fiscal
consolidation plans...," the declaration said.
India's worries on protectionism were also found a
mention in the Seoul Action Plan.
The leaders agreed that their countries will "refrain
from introducing and, oppose protectionist trade actions in
all forms and recognise the importance of a prompt conclusion
of the Doha negotiations."
They also affirmed their commitment to avoid financial
protectionism.
The leaders also pledged their commitment to reform the
International Monetary Fund (IMF), "that better reflects the
changes in the world economy through greater representation of
dynamic emerging markets in developing countries."
They said the comprehensive quota and governance reforms
"will enhance the IMFs' legitimacy, credibility and
effectiveness making it an even stronger institution for
promoting global financial stability and growth."
To take on board concerns of the US and other western
countries facing the problems of high unemployment, the
leaders agreed to implement structural reforms that boost and
sustain global demand and faster job creation. PTI RR
PBL


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