G20 members hold on to growth commitments amid eurozone debt drama

CANNES, France, Nov. 4 (Xinhua) -- The leaders of the Group of Twenty (G20) economies agreed on Friday to secure sustainable growth in coordinated efforts but with respective focuses, as economic uncertainties add to global challenges.

Despite a Greek referendum drama which threatened to derail EU efforts to defuse a debt crisis, French President Nicolas Sarkozy tried hard throughout the two-day summit to push previously designed G20 agenda, including global growth commitments, back on track.

"Today, we reaffirm our commitment to work together and we have taken decisions to reinvigorate economic growth, create jobs, ensure financial stability, promote social inclusion and make globalization serve the needs of the people," read a final communiqué adopted by G20 leaders who met in the French resort city of Cannes on Thursday and Friday.

Giving consideration to each country’s respective circumstance is the shining part of the old commitments. "Each of us will play their part," the communiqué added.

G20 countries have chosen different measures to tackle their respective priorities. Advanced countries with tight budget "commit to adopt policies to build confidence and support growth" and "to achieve fiscal consolidation," while countries with surplus will "boost domestic demand," according to the communiqué.

The leaders also agreed to increase the International Monetary Fund (IMF) resources to enable it to play a key role in defending growth and preparing for unexpected shocks, Sarkozy said.

According to the communiqué, G20 leaders pledged to support the IMF’s proposal of establishing "a single facility to fulfill the emergency assistance needs of its members," but didn’t give more detail.

Little progress was made in the reform of international monetary system, though it has been a long-time consensus that "the SDR basket composition should continue to reflect the role of currencies in the global trading and financial system."

"To adjust to currencies' changing role and characteristics over time, the composition of the SDR basket will be reviewed in 2015, or earlier, as currencies meet the existing criteria to enter the basket," the communiqué said, echoing Sarkozy’s words that this would be a long-term process.

In an effort to contain the Greek debt crisis from spilling over to larger economies, the IMF was given a new responsibility to monitor Italy’s policy implementation in its economic reforms on a quarterly basis, joined by the European Commission.

In the meantime, G20 leaders made a step in strengthening financial regulations by calling for reaping benefits from financial integration, but failed to stay on the same page over specific measures.

"We have agreed on actions and principles that will help reap the benefits from financial integration and increase the resilience against volatile capital flows," said the final communiqué.

"We will not allow a return to pre-crisis behaviors in the financial sector and we will strictly monitor the implementation of our commitments regarding banks, OTC markets and compensation practices," the communiqué underlined, vowing to bring shadow banking system into sunshine.

However, aside from agreeing to task several international organizations to assess CDS (credit default swaps) functions and enhance management against speculation, the G20 leaders failed to iron out differences over the introduction of a financial transaction tax (FTT), which has been eagerly promoted by this year’s G20 host of France.

Sarkozy said Spain, Brazil, Argentina and South Africa along with France and Germany have expressed support for the tax, but the United States, Canada and some other big powers still oppose it.

"France is determined to fight for the financial transaction tax" because it is "technically possible, financially indispensable and morally inarguable", Sarkozy told the press conference.

Nevertheless, the G20 Summit is marked by a significant improvement on tax matters as they have all adopted the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which means wider global cooperation on tax issues.

Dismissing talks to set up a secretariat for G20, the communiqué said this forum would remain as "an informal group" but decided to "formalize the Troika made of past, present and future Presidencies" to steer the work of the G20 in consultation with its members.

After France, Mexico will start chairing the G20 from December 1, 2011.