Most developed countries agree that government debt and budget deficits need to be reduced, Russian Finance Minister Anton Siluanov told the press.
A year ago countries talked at G20 meetings about what was more important budget consolidation or economic growth, the minister said. "It was said that maybe countries with big debts should not rush to achieve low deficit levels, rather countries with emerging markets and a surplus in their payment balances and budgets could increase demand. And these could pull out the global economy," he said.
However, recently this kind of talk has been heard less and less, Siluanov said.
"You ask whether requirements for tough budgets can be eased? No, most developed countries with a high level of government debt acknowledge the need to have state debt reduction programs," he said. Whether the heads of state can carry out such programs is a political issue. However, everybody understands that without cutting debt there cannot be any economic growth. "Thus the chief trend for countries with a high level of debt - is to have a cutbacks program," he said.
Budget issues such as how to balance the budget, what spending to cut and whether to raise the tax burden remain on the agenda. There is also some focus on budget consolidation structure. "Cutting spending, or so-called budget consolidation do not always work in the same way. Spending on innovation and infrastructure could be cutback and that really would hit economic growth. Or inefficient tax breaks could be reduced and that would have a lesser impact on economic growth," he said.
Ksenia Yudaeva, the current chief of the Presidential Experts' Directorate and the president's representative in the G20, said often the subject of mitigating budget deficit requirements arises due to some reduction in trade imbalances between countries. However, she said, all researchers know that the correction in the imbalance was due to an economic slump and that there were no serious structural changes that would allow economies to grow in a more balanced way. "This subject remains on the economic policy radar and it will receive a lot of attention," she said.
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