Exit strategies to be designed

One year after the outbreak of the financial crisis, the world major economies are now showing positive signs of recovery thanks to stimulus measures adopted by the governments.

The European Commission forecast on Monday that the EU economy is set to get out of recession in the third quarter of this year, but warned uncertainty is rife.

EU leaders are likely to agree on a common line that the stimulus measures should be maintained at the present stage, while world governments must now draft exit strategies to withdraw them in a coordinated way.

"The G20 should reaffirm its determination to continue implementing coordinated policy measures in order to develop the basis for sustainable growth and to avoid a repetition of the present financial crisis," the draft said, stressing "Efforts must be maintained until recovery is secured."

"Exit strategies need to be designed now and implemented in a coordinated manner as soon as the recovery takes hold," it added.

European Commissioner for Economic and Monetary Affairs Joaquin Almunia said on Wednesday that it is still too early for the governments to withdraw fiscal stimulus.

"We are not yet able to ensure that economic activity can standalone without recourse to such stimuli," he told the European Parliament in Strasbourg, France.

Analysts said when to phase out stimulus measures is essential since removing them too soon would be detrimental to the momentum of economic recovery, while slow withdrawal would increase the risk of inflation and create more burden on public finances.

Pressing others on climate financing

Besides financial reform and economic recovery, EU leaders are also expected to discuss the global fight against climate change.

World governments are scheduled to conclude a deal in Copenhagen, Denmark, in December to create a new framework for further international action on climate change, to follow up on the Kyoto Protocol's first commitment period which ends in 2012.

But with less than three months left, the negotiations are currently deadlocked due to divisions between rich nations and developing countries. The upcoming G20 summit would be a chance for world leaders to break the impasse.

One of the sticky issues now is how much developed countries can pay to help poor nations combat global warming.

It was estimated by the EU that by 2020 developing countries are likely to face annual costs of around 100 billion euros (147 billion US dollars) to mitigate their greenhouse gas emissions and adapt to the impact of climate change.

The European Commission proposed last week that the EU could contribute some 2 billion to 15 billion euros (2.9 billion to 22 billion dollars) a year by 2020 to help poor nations, but the amount was criticized by environmental groups as being too low.

EU leaders will try to find a deal on their contribution, but they are expected to press other countries, including emerging economies, also to pay.

"All countries, except the least developed, should contribute to financing the fight against climate change in developing countries," the draft said.

(Xinhua News Agency September 17, 2009)