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St. Petersburg Action Plan

September 6, 2013, St Petersburg

1. The State of Global Economy
2. Supporting the Recovery and Addressing Near-Term Risk
3. Strengthening the Foundations for Strong, Sustainable and Balanced Growth
   3.1 Enhancing Fiscal Sustainability
   3.2 Structural Reforms

St Petersburg Action Plan

Strengthening growth and creating jobs is our top priority and we are fully committed to taking decisive actions to return to a job rich, strong, sustainable and balanced growth path.

1. The State of Global Economy

We have taken a number of important policy actions that have helped to contain key tail risks, improve financial market conditions and sustain the recovery. Private demand has strengthened in the U.S. and growth has picked up in Japan and the U.K. There are signs of recovery in the euro area. While growth has continued in emerging market economies, it has slowed down in some of them. Global growth prospects for 2013 have been marked down repeatedly over the last year, global rebalancing is incomplete, regional growth disparities remain wide, and unemployment, particularly among youth, remains unacceptably high. Despite our actions, the recovery is too weak, and risks remain tilted to the downside. In the last months financial market volatility has increased.

We consider the main challenges to the global economy to be:

• Weak growth and persistently high unemployment, particularly among youth, and the need for more inclusive growth in many economies;

• Financial market fragmentation in Europe and the decisive implementation of banking union;

• Slower growth in some emerging market economies, reflecting in some cases the effect of volatile capital flows, tighter financial conditions and commodity price volatility, as well as domestic structural challenges;

• Insufficient levels of private investment in many countries, in part due to continuing market uncertainties, as well as internal rigidities;

• High public debt and its sustainability in some countries that need to be addressed while properly supporting the recovery in the near-term, especially in countries with the highest actual and projected debt-to-GDP levels;

• Volatility of capital flows as growth strengthens and there are expectations of eventual monetary policy recalibration in advanced economies;

• An incomplete rebalancing of global demand; and

• Continued uncertainties about fiscal policy deliberations.

To address these challenges and to place the global economy on a stronger, more sustainable and balanced growth path, we have built on our previous actions with new measures as set out in this Action Plan. The Action Plan is designed to boost economic activity and job creation, support the recovery, and address near-term risks to the outlook, while strengthening the foundations for strong, sustainable and balanced growth through ambitious and well-targeted reforms. The Action Plan is informed by the assessment of the economic outlook, and the Accountability Assessment, which describes our progress made toward implementing existing commitments and identifies gaps in our reform agenda. The Action Plan is also based on our commitment setting process, which includes our fiscal strategies, our monetary and exchange rate policy commitments, and a resetting of our structural reform agenda along more concrete and ambitious lines.

Our fundamental belief remains that collective and coordinated actions are the most effective way forward. We confirm the paramount importance of the G20 as a forum for open and engaged dialogue among us and as a means to work together to build a common understanding of complex policy issues and to reach solutions.

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2. Supporting the Recovery and Addressing Near-Term Risks

The G-20's immediate focus is on creating the conditions to increase growth and employment with timely actions that build on the signs of a recovery in advanced economies to make it durable to the benefit of the whole global economy:

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3. Strengthening the Foundations for Strong, Sustainable and Balanced Growth

We are committed to strengthening the foundations for long-term growth through implementing ambitious and targeted reforms designed to ensure fiscal sustainability, boost investment, increase productivity and labor force participation, and address internal and external imbalances.

3.1 Enhancing Fiscal Sustainability

Achieving a stronger and sustainable recovery, while ensuring fiscal sustainability in advanced economies remains critical. All advanced economies have developed credible and country-specific medium term fiscal strategies to better anchor expectations. These strategies reflect individual country circumstances and will be implemented flexibly to take into account near term economic conditions, so as to support economic growth and job creation, while putting debt as a share of GDP on a sustainable path (Annex 1).

As agreed, all advanced economies have put forth strategies that are geared toward maintaining or lowering the debt-to-GDP ratio over the medium term. Canada, France, Germany, Italy, Korea, and Spain have explicitly committed to reduce debt as a share of GDP through country-specific targets for the debt-to-GDP ratio beyond 2016. The U.K. commits to set a debt target once the exceptional rise in debt has been addressed. Given its low debt, Australia commits to maintaining fiscal sustainability over the medium term. Japan will seek to steadily reduce the public debt-to-GDP ratio after achieving a primary surplus by fiscal year 2020. In the U.S., the President's budget projects that federal debt held by the public will be on a downward path over the next decade.

A number of emerging market economies have also laid out key elements of their strategies to promote fiscal sustainability (Annex 2).
These medium term strategies will support confidence and sustained growth and improve the resilience of our economies and public finances to shocks. They will also help to ensure that countries are able to address significant fiscal challenges in coming years (including age-related expenses) and provide an anchor that will help build fiscal space and give countries more room for discretionary actions and/or allowing automatic stabilizers to be fully operational, as necessary. Taken together, these strategies demonstrate a meaningful strengthening of the G20's commitment to fiscal sustainability, achieved in the context of supporting jobs and growth.

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3.2 Structural Reforms

Recognizing the need to push ahead more urgently with important structural reforms, we have reset our reform agenda along more relevant, concrete and well-targeted lines. Members have committed to a wide range of reforms to strengthen the foundations for strong, sustainable and balanced growth over the long term by boosting investment, addressing fundamental weaknesses, enhancing productivity and competitiveness, increasing labour force participation, improving financial stability and credit access, and addressing internal and external imbalances. These reforms are key to achieving a lasting improvement in potential growth, job creation and rebalancing demand.

Stronger Growth
Reforms to promote investment can lift potential growth, create jobs and contribute to needed global rebalancing.

As an important prerequisite for strong growth, countries have also committed to measures designed to enhance productivity and competition.

All members remain committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for stronger, sustainable and balanced global growth.

Sustainable Growth
Reforms aimed at encouraging labour force participation and human capital development to reduce long-term structural unemployment and increase employment, while reducing the size of the informal economy, can have significant impacts on sustaining economic activity.

All G20 members are fully committed to the timely implementation of financial market reforms agreed in the past. Some members have proposed additional reforms to increase the resilience of national financial systems and reduce the risk of future financial crises.

Balanced Growth
We are determined to achieve more progress toward broad-based rebalancing of global demand. While global current account imbalances have declined, reflecting in part important reforms in a number of countries, a substantial part of this progress has occurred due to demand compression. In order to ensure a durable improvement as global growth strengthens, we are determined to undertake further policy adjustments toward rebalancing global demand between surplus and deficit countries, as well as internal rebalancing. In this respect, it is essential to achieve stronger domestic demand growth in large surplus economies, increased savings and enhanced competitiveness in deficit economies and more flexible exchange rates. We are committed to actions in all these areas and will regularly assess progress.

Details on country-specific reform commitments in all areas described above are attached (Annex 3). Going forward, we will continue our work to strengthen the structural reform agenda.
This Action Plan sets forth our reforms for achieving strong, sustainable and balanced growth. Further, our Accountability Assessment describes the progress we have made on past commitments in (Annex 4). We will identify the remaining key obstacles to be addressed and reforms needed to achieve stronger, more sustainable and balanced growth in our economies. We ask our Finance Ministers to develop further the comprehensive growth strategies for presentation to the Brisbane Summit.

Source: Official G20 website of the Russian Presidency

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