SINGAPORE: Asia-Pacific Economic Cooperation finance ministers will reject any premature moves towards fiscal tightening and advocate a steady retreat from stimulus measures, according to a draft communique obtained by Agence France-Presse Tuesday. “We agree that the solution is not to rush to fiscal tightening, especially while credit markets are still recovering,” the draft said.

“Careful planning and timing withdrawal of extraordinary stimulus measures will help to avoid a double-dip recession.”

Leaders of the 21-member Asia-Pacific Economic Cooperation (APEC) forum, including the United States and China, will meet in Singapore on November 14 to 15 to discuss global economic recovery, environmental issues and free trade.

The draft finance ministers’ statement is currently being refined by senior officials, ahead of the ministerial meeting on Thursday.

“While we have transited from a crisis to a more stable phase, we remain vigilant as economic recovery is still tentative and likely to be slow going forward,” it said.

“We noted the initial positive effects of the stimulus measures, but also recognized their longer-term implications on public debt/deficits,” it said, adding the measures should be well-designed and include exit strategies.

In another draft communique obtained by AFP last week, APEC leaders also pledged to maintain hefty stimulus packages until they secure a “durable” recovery from the global economic slowdown.

“We will maintain our economic stimulus policies until a durable economic recovery is secured,” the leaders’ draft said, stressing that “economic recovery is not yet on a solid footing.”

The administration of US President Barack Obama—who will attend APEC—implemented a $787-billion Recovery Act in February which the White House says has saved or created nearly 650,000 jobs, and likely more than a million.

And analysts say massive stimulus packages rolled out by Asian governments played an important role in helping the region weather the downturn better than the United States or Europe.

The Asian packages totaled more than $1 trillion, according to a tally by Standard&Poor’s, led by $585 billion in spending by China.

The APEC summit’s host, Singapore Prime Minister Lee Hsien Loong, said last week that winding down the stimulus packages to make way for growth led by the private sector should be managed carefully.

“How exactly it has to be phased out . . . and how you balance the risks of withdrawing too quickly and administering too much adrenalin, that is something which will have to be discussed by the finance ministers and the central banks and calibrated as we go along,” he said.
AFP