(See GMEET <GO> for more on the G-20 meetings.)
Sept. 24 (Bloomberg) -- The world’s major economies must reverse an “unsustainable” build-up of public and private debt to restore confidence and bolster global growth, German Finance Minister Wolfgang Schaeuble said today in Washington.
“Reducing the debt overhang is a fundamental prerequisite for growth,” Schaeuble said in a speech prepared for delivery at the International Monetary and Financial Committee. “We must concentrate on firmly implementing agreed policy strategies, in particular the implementation of medium-term fiscal consolidation,” strengthening financial sectors and enhancing growth potentials.
Group of 20 countries must stick to their commitment to cut their public deficits in half by 2013 and stabilize their debts by 2016, as agreed at a meeting of their leaders in Toronto last year, Schaeuble said.
Chancellor Angela Merkel’s coalition has thrown its weight behind lowering deficits as essential to tackling the root causes of dwindling confidence in financial markets, saying slowing growth in industrialized countries and doubts that the U.S. and Europe can restore fiscal soundness pose risks to stability.
While the upswing in the German economy is still intact, unemployment is falling at a slower pace, Schaeuble said. Risks of a further easing in industrial activity have increased as cooling world trade is putting a strain on the economy, he said.
Germany is still on course to balance its budget by 2014, cut its debt to 72 percent of gross domestic product by 2015 and comply with European Union deficit-reduction targets two years earlier than required, Schaeuble said.
“Global financial stability risks have increased severely over the past months,” Schaeuble said. “Regaining confidence will require resolute and reliable endeavors to fiscal consolidation thus ensuring fiscal sustainability as well as further strengthening of bank balance sheets.”
--Editors: Paul Badertscher, Gail DeGeorge
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