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OECD ministers determined to undertake fiscal consolidation
Date:2010/6/2      View:1372

The ministers or chief representatives participating in the annual ministerial meeting of the Organization of Economic Cooperation and Development (OECD) agreed Friday with determination to undertake fiscal consolidation as spreading Greek debt crisis is threatening fragile global economy recovery.

Besides pledges to implement structural reforms and promote innovation and green growth, fiscal consolidation was highlighted in the four-page conclusions yielded by the three-day ministerial meeting as the major fruit.

Due to the current deteriorating fiscal situation weighing most of OECD countries, the ministers unanimously regarded fiscal consolidation "a crucial task" imperatively to be addressed.

"It is important to develop credible and transparent medium- term fiscal consolidation plans through appropriate institutional mechanisms," the joint statement by ministers underlined and pledged to "implement them in ways that do not jeopardize growth."

Given the strengthened but still vulnerable recovery, OECD recommended its members to exit fiscal stimulus package soon but in a balanced way, and thus the ministers also reached agreement to "improve structural balances and stabilize and lower the burden of public debt in the medium and long term."

"It's not so simple and not so straight," the OECD Secretary- General Angel Gurria admitted, referring to key mechanism to address the painstaking task, at the news conference presenting the meeting conclusions.

Each member has its different pace in recovery and some are facing critical difficulties, Gurria pointed out, citing two of OECD members experienced "14 percent drop in gross domestic product (GDP)." Accordingly, he called policy makers to "keep one eye on both" in face of today's "complex sequencing issue."

OECD data showed that the proportion of euro zone and U.S. debt have reached 83 percent of GDP in 2009 and was expected to reach 94 percent in the next year, which reflects the latest conclusion of OECD economic outlook that rising debt has been the "first substantive risk" for sustainable recovery.

Additionally, the representatives vowed to be committed to implement structural reforms, try sustainable sources of growth, tackle weak labor market and to advance global economic cooperation.

Created in 1961, the OECD groups all industrial countries in the world and provides monitoring, analyzing and forecasting works in terms of economic development and social changes. It officially welcomed Estonia, Israel and Slovenia as three new members on Thursday, and thus will expand to a 34-member bloc as soon as the three states' legislative authority approve the decision.

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