G-20: The proposal to halve fiscal deficits “is too draconian, a little difficult, a little exaggerated. Some countries would not meet it,” Mantega said, citing Japan and Italy. “It is clear that we need to cut, but at what speed?”
Brazil Calls ‘Draconian’ Goal to Halve G-20 Nations’ Deficits
June 26, 2010, 8:07 PM EDT
By Fabiola Moura
June 26 (Bloomberg) -- A proposal to cut by half the budget deficits of the Group of 20 nations by 2013 and to reduce debt by 2016 would be “draconian” for some countries, said Brazilian Finance Minister Guido Mantega.
“Brazil can easily meet these goals,” Mantega, who is heading the Brazilian delegation at the G-20 summit in Toronto, told reporters today. “My concern is with countries with deficits above 10 percent and colossal debts.”
Canadian Prime Minister Stephen Harper was expected to urge G-20 countries to halve their fiscal deficits by 2013 and put their debt-to-gross domestic product ratios in a downward projectory by 2016, Harper spokesman Dimitri Soudas told reporters today after the Group of 8 meetings.
The proposal to halve fiscal deficits “is too draconian, a little difficult, a little exaggerated. Some countries would not meet it,” Mantega said, citing Japan and Italy. “It is clear that we need to cut, but at what speed?”
Brazil backs targets to reduce deficits as long as the cuts don’t harm growth, Mantega said. Exporting countries such as Japan and Germany should prioritize growth of their domestic markets over cuts in deficits and debt, Mantega said.
“We know the problem and we know the remedy, the question is what is the adequate dose of this remedy?” Mantega said. “If you give the right dose, you cure the patient. If you exaggerate, you kill him.”
G-20 leaders have been split over how best to implement new financial standards, while agreeing on the general need for changes to avoid a repeat of the 2008 financial crisis.
Lower Deficit
“Japan’s debt is almost three times the GDP, but it is not a threat to the world economy,” he said. “It is important that Japan works to cut its debt, but more important for it to grow.”
Brazil will cut its fiscal deficit to 1.5 percent of GDP this year, from 3 percent. The country will gradually reduce its debt to 30 percent of the economy, Mantega said.
Mantega is heading the Brazilian delegation to the meeting of leaders from the G-20 group of nations in Toronto after president Luiz Inacio Lula da Silva decided yesterday to cancel his trip to focus on recovery efforts after floods ravaged the northeastern part of the country.
Heavy rains in the states of Alagoas and Pernambuco have left at least 51 dead and thousands homeless, Folha de S.Paulo newspaper reported yesterday. Brazil’s federal government will release 500 million reais ($281 million) for relief and rebuilding, Lula said yesterday.
--Editor: David Scanlan, Brendan Murray
To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net Andrew J. Barden at barden@bloomberg.net |
