“Advancing the pace and the effectiveness of global rebalancing will be a dominant priority going into these meetings,” a senior Department of Treasury Official told reporters on Wednesday.
He said that while Pittsburgh meeting adopted the framework for strong, sustainable and balanced growth and Toronto provided clarity on areas like sovereign debt sustainability, “the challenge ahead is to demonstrate G-20 commitment on cooperation to facilitate rebalancing of global demand and adjustment of exchanges”.
Finanace Minister Pranab Mukherjee and US Treasury Secretary Timothy Geithner, among others, will attend the meeting.
“We need to make progress together on reducing current account imbalances to sustainable levels,” the official said.
He added that the US, for its part, will focus on boosting its national savings, strengthening exports and investing in the long-term competitiveness of the US economy within the G-20 framework.
He said countries that run large surpluses over sustained periods of time need to undertake policies that will boost their domestic demand, and added that they will need to see more progress on the part of key emerging economies who run sustained surpluses to move to more flexible, more market-oriented exchange rate systems.
For long, the US has maintained that China has kept its currency ‘artificially’ low to push cheap exports and have huge trade surpluses with America and is harming its economy.
The official said that when large economies with undervalued exchange rates act to keep their currencies from appreciating, it compels other countries to do the same, setting off a dynamic of competitive non-appreciation.
“It’s bad for the system and it’s bad for all of us. It imposes an unfair burden of adjustment on other emerging markets that are running more flexible exchange rate regimes,” he added.
Besides, he said the G-20 will have to work towards reducing the risk of excessive volatility of capital flows,” the official said.
On International Monetary Fund (IMF) reform, the official said that one of the core functions of this body is to undertake rigorous surveillance of the international monetary system.
“We have and will continue to push for reforms to the Fund’s governance structure to enhance its legitimacy, credibility and effectiveness in addressing these global economic challenges,” the official said.
At the Pittsburg Summit, the official said, the G-20 committed to increase the voice and vote of dynamic emerging and developing countries, including a 5-per cent shift in voting share from over-represented countries to underrepresented countries.
“We believe a deal on voting shares is within reach. And we’re also seeking to make the IMF’s board more representative.” he added.