20 April 2013

Anton Siluanov: The budget policy flexibility is required

G20 Finance Ministers and Central Bank Governors met within the IMF and World Bank Spring meeting on April 18-19, 2013 in Washington D.C. During the press conference Russian Finance Minister Anton Siluanov outlined the issues raised at the meeting and achieved preliminary results.

The most controversial discussions, from the Minister's prospective, was  implementation of commitments taken within  the Framework for Strong Sustainable and Balanced Growth. Particularly, within the fulfillment agreements achieved by the G20 Leaders in Los Cabos in 2012 the mid-term national debt indicators and figures were discussed. The Finance Ministers and Central Bank Governors agreed to continue the discussion on this issue so that to achieve final decisions to the Leaders' summit in St.Petersburg in September, 2013.

"There were suggestions regarding the necessity in providing budget policy flexibility. If we impose tough restrictions on debts and deficits, this could bring rapid changes. In fact, the situation changes every six months and even every month, so that the restrictions would be hard to accomplish. Therefore, we all made an agreement that there is no need for tough requirements' imposing, although there was a consensus about the need for defining the mid-term underlying fundamentals for reducing the debt burden. We agreed on flexible fundamentals, strategic tasks and goals that could change depending on the economic situation in our countries," Anton Siluanov stressed. During the meeting there was also discussed the international financial architecture. It was acknowledged that the IMF reform is tightened, but that previous commitments should be fulfilled  by the end of 2013 or the beginning of 2014.

"We have agreed to continue further work on reforms of IMF governance and simultaneously made a progress in redistribution of quotas shifting towards emerging markets and developing countries, in view of increasing their relative shares and weights in the world economy are growing," the Russian Minister noted. "We understand the necessity for further increasing IMF resources, and agreed to consider the opportunities for such an increase. We still have time and opportunities to meet the required deadlines.

Speaking about the role of the invited countries in the G20 process, Siluanov pointed out that their involvement in general discussions is beneficial as for invited countries, and also as for G20 members since they are willing to hear counter reaction on a number of issues.

"We strongly support the expansion of this collaboration and the involvement of other countries in G20 process, including the African continent."

During the meeting Finance Ministers and Central Bank Governors also discussed the economic situations in Japan and Cyprus. Siluanov said that Japan was clearly emphasized their position - Japan's recent policy action regarding quantitative easing would allow the country to support domestic growth, move forward with economic growth and overcome the deflation of the past 15 years.

As far as Cyprus is concerned, the Russian Minister said, "We believe that the sooner the problem is solved the sooner it will allow to restart the banking system of Cyprus and its economy will return to a normal operation."

Generally, Siluanov noted, the discussion participants were very enthusiastic. He also expressed his hope that such discussions would continue next July on the G20 Finance Ministers and Central Bank Governors Meeting in Moscow and on the autumn eve of the IMF and World Bank Spring Meetings in Washington D.C.

The G20 Finance Ministers and Central Bank Governors' Meeting also resulted in a joint communiqué.

Video of the press conference you can see at the IMF website