Manmohan Singh asks G-20 nations to avoid competitive devaluation of currency

SEOUL - The Prime Minister, Dr. Manmohan Singh, on Friday urged G-20 countries to avoid competitive devaluation of currencies at all costs and resist any resurgence in protectionism.

Addressing the plenary session of the fifth G-20 Summit in Seoul this morning, Dr. Singh said: “Advance deficit countries must follow policy of fiscal consolidation. This should be consistent with their individual circumstances to ensure debt sustainability over the medium term.”

“While structural reforms are necessary everywhere, these should increase efficiency and competitiveness in deficit countries, while expanding internal demand in surplus countries. This rebalancing will take time, but it must begin,” he added.

He said the exchange rate flexibility is an important instrument for achieving a sustainable current account position and the policies must reflect this consideration.

“Recycling surplus savings into investment in developing countries will not only address the immediate demand imbalance but it will also help to address developmental imbalances,” he added.

Expressing confidence that G-20 will be able to translate the rich agenda before the summit into tangible outcome under the forthcoming presidency of France, he said: “The G-20 was an apt response to an adverse situation that the world faced.”

Dr. Singh further complimented the South Korean presidency for the initiative it took to include development as an accepted item in the agenda of the G-20.

“The G-20 was born at the time of a crisis and as such it has been preoccupied with the short term agenda of crisis management and global rebalancing. However, one of the biggest imbalances facing us the development imbalance and putting development on the G-20 agenda fills an important gap,” he added.

He said developing countries performed well in the years before the crisis and have also done well in subsequent years.

“However, we need to ensure that the global economic environment, including especially the environment for trade, and investment flows remains strongly supportive of development,” Dr. Singh said.

Dr. Singh said the Seoul Development Consensus and the associated Multi- Year Action Plans, which are before the G-20 countries provide a comprehensive agenda with timelines, which should be pursued in all relevant fora in the months ahead.

“I am particularly happy to endorse the focus on facilitating investment in national and regional infrastructure projects and the call for establishing a High Level Panel to recommend measures to mobilise private, semi-public and public resources for infrastructure investment and to review MDB policy in this area,” he said. (ANI)