G20 Commits to Deficit Reduction Time Line

27 June 2010

World leaders pose during a group photo at the G20 summit in Toronto, 27 June 2010

Leaders of the Group of 20 meeting in Toronto, Canada have agreed that the world's most advanced industrialized countries should reduce their budget deficits by half within three years, with further steps to cut debt relative to economic output by 2016.

The G20, which includes major industrialized powers in the Group of Eight plus developing nations with significant economies such as China and India, agreed to a specific time line for deficit reduction, while giving governments flexibility to adjust the pace of changes based on their own situations.

A plan promoted by host Canada will have the most advanced countries cut their budget deficits in half by 2013. By 2016, governments would be required to stabilize or begin reducing the percentage of their debt as measured against total gross domestic product, the value of all goods and services produced in a given country.

Canada's Prime Minister Stephen Harper, who in opening the summit said nations are walking an economic "tightrope," noted that the G20 declaration leaves room for continuing stimulus measures and steps to bring down debt.

"All leaders recognize that fiscal consolidation is not an end in itself," he said. "There will be a continued role for ongoing stimulus in the short-term as we develop the framework for strong, sustainable and balanced growth."