G-20 agrees to cut deficits once recoveries cemented

Group of 20 leaders endorsed targets to cut deficits and agreed to pursue higher capital requirements for banks once their economic recoveries take root.

Advanced economies will aim to at least halve deficits by 2013 and stabilize their debt-to-output ratios by 2016, according to a statement released as leaders finished meeting in Toronto on Monday. The G-20 said banks need to raise capital "significantly" and countries will be allowed to phase in new rules, with a goal of meeting new standards by the end of 2012.

"Honestly, this is more than I expected, because it is quite specific," German Chancellor Angela Merkel said, referring to the fiscal targets. "It's a success that industrialized countries as a group accepted this."

Stephen Harper, Canada's prime minister, left to right, U.S. President Barack Obama and King Abdullah of Saudi Arabia pose during the Group of 20 family photo in Toronto, Ontario, Canada, on Sunday, June 27, 2010. G20 leaders are poised to endorse targets to tackle deficits, while giving nations flexibility to carry out their stimulus plans, according to excerpts of a draft of the statement sent to reporters. (Bloomberg)

The G-20 also pledged to maintain existing stimulus plans and take "concerted actions" to sustain the recovery. Recent events highlight the need to establish "properly phased" plans to rein in deficits. Emerging market economies pledged to take measures to strengthen social safety nets, raise infrastructure spending and enhance exchange rate flexibility.