APEC finance ministers will reject any premature moves toward fiscal tightening and advocate a steady retreat from stimulus measures, according to a draft communique obtained by reporters yesterday.
“We agree that the solution is not to rush to fiscal tightening, especially while credit markets are still recovering,” the draft said. “Careful planning and timing withdrawal of extraordinary stimulus measures will help to avoid a double-dip recession.”
Leaders of the 21-member APEC forum, including the US and China, will meet in Singapore on Saturday and Sunday to discuss global economic recovery, environmental issues and free trade.
The draft finance ministers’ statement is being refined by senior officials ahead of the ministerial meeting tomorrow.
“While we have transited from a crisis to a more stable phase, we remain vigilant as economic recovery is still tentative and likely to be slow going forward,” it said.
“We noted the initial positive effects of the stimulus measures, but also recognised their longer-term implications on public debt/deficits,” it said, adding the measures should be well-designed and include exit strategies.
In another draft communique obtained by reporters last week, APEC leaders also pledged to maintain hefty stimulus packages until they secure a “durable” recovery from the global economic slowdown.
“We will maintain our economic stimulus policies until a durable economic recovery is secured,” the leaders’ draft said, stressing that “economic recovery is not yet on a solid footing.”
Separately, Australian Trade Minister Simon Crean yesterday defended the strength of the country’s currency, saying it played a major role in bolstering the economy during the global slowdown.
Speaking ahead of the APEC summit, Crean said the strong Australian dollar allowed the country to cope with the slowdown “better than any other developed country.”
The strong Australian dollar “is a reflection fundamentally of the strength of the Australian economy, an economy which of all the developed economies of the world, is performing the best.”
Australia’s dollar broke past the US$0.90 barrier to reach its highest level in 14 months last month.
The Australian dollar was trading at US$0.93 to the US dollar at 5am GMT yesterday.
The government is not looking to interfere in the Australian dollar’s valuation in the near term, Crean added.
“Australia clearly has no plans to move to any sort of regulatory environment in terms of its exchange rate ... [as] Australia looks forward with confidence to the future.”
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