OTTAWA - Prime Minister Stephen Harper is calling on advanced economies at next week's Group of 20 summit to sign on to ambitious targets and timetables for reducing deficits and sovereign debt.
In a letter to the G20 leaders released Friday afternoon, Harper, who is chairing the meetings in Toronto, urges nations facing crushing deficits and debt to get their houses in order.
He says advanced nations should cut annual deficits in half from current levels by 2013, and by 2016 should have their accumulated debt either on a stable or downward track relative to the size of their economies.
Harper notes the International Monetary Fund projects that following an aggressive agenda at the G20 could grow the global economy by US$4 trillion, create 52 million new jobs, and lift 90 million people out of poverty in five years.
"Failure to deliver is not an option," he writes. "We have a responsibility to our citizens and indeed to all citizens to strive for the best possible outcome."
Harper's call for fiscal restraint is similar to recent advice from the IMF, which has called on indebted western nations to aim for debt to gross domestic product ratios of 60 per cent over the next 20 years.
That will require draconian restraint measures, including cuts to social services coupled with tax increases. The average debt to GDP ratio is heading to 110 per cent in the next few years.
Harper calls his plan necessary to ensure growing deficits don't lead the kind of situation faced by Greece, but stresses restraint must only come after governments have fulfilled their stimulus spending commitments.
The stimulus "worked" in sheltering nations from a much worse recession. And it must be fully implemented because "we are not out of the woods yet," he writes.
"At the same time," he adds, "advanced countries must send a clear message that as their stimulus plans expire they will focus on getting their fiscal houses in order. This requires credible plans for fiscal consolidation to dispel the uncertainty and financial volatility that can impair future growth prospects."
Liberal Finance critic John McCallum called Harper's letter presumptuous, adding that the recent news about profligate spending surround the G8 and G20 summits have stolen Harper's thunder.
"I don't think it's credible to preach restraint, when your actions say the opposite," he said. "It's not only made Stephen Harper a bit of a laughing stock, but since he's the prime minister, it's made Canada a bit of a laughing stock."
McCallum also questioned whether uniform restraint targets are appropriate when countries are facing such widely-divergent fiscal challenges. They range from Canada at the low end with debt to GDP at just above 30 per cent, to Japan with a ratio approaching 200 per cent.
A government official said Canada will easily be able to meet the targets.
Harper's message to the G20 differs in emphasis from one sent out by U.S. President Barack Obama at about the same time, where Obama warns about the dangers of a double-dip recession.
Both leaders implore the G20 members to "safeguard" the fragile economic recovery, and avoid sending the world back into a recessionary tailspin.
But while they share the same pre-occupation, they differ subtly in where they see the biggest risks for recovery.
Obama emphasizes the need to keep stimulus measures in place for as long as necessary, to get people back to work.
"Our highest priority in Toronto must be to safeguard and strengthen the recovery," Obama says in his letter, dated June 16 but released publicly on Friday morning.
"This means that we should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong."
In other words, Obama does not want other countries to cut their stimulus packages before the giant U.S. economy has a solid chance to regain its momentum. And if necessary, more stimulus should be at the ready.
"In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avert a slowdown in economic activity," he writes.
Harper's letter makes no mention of the possibility governments may again have to dip into their treasuries to support their economies, although it too stresses that all nations are not in the same boat.
Harper's director of communications, Dimitri Soudas, bristled at the suggestion the two leaders differed on how to proceed.
"I reject the premise," he said. A government official notes that Obama also commits to reducing the U.S. deficit to three per cent of GDP by 2015.
And he had a quick response to McCallum's criticism, accusing the Liberal finance critic of "anti-Canadian rhetoric" for claiming the lavish spending on the summit had made the prime minister and Canada an international laughing stock.
