PARIS (MNI) – The following is the first part of a verbatim text of
the communique issued Saturday by G20 finance ministers and central bank
governors following their two-day meeting here. The second part will
follow in a separate file:

“We, the G20 Finance Ministers and Central Bank Governors, met
today to address ongoing economic and financial challenges and to agree
on a way forward to fulfill the mandates given to us by our Leaders.

The global recovery is strengthening but is still uneven and
downside risks remain. While most advanced economies are seeing modest
growth and persisting high unemployment, emerging economies are
experiencing more robust growth, some with signs of overheating. We
reaffirm our willingness to ensure a consistent and coordinated response
to the challenges we face, address the root causes of the crisis and
restore global economic growth on a sounder basis.

We reaffirm our commitment to coordinated policy action by all G20
members to achieve strong, sustainable and balanced growth. Our main
priority actions include implementing medium term fiscal consolidation
plans differentiated according to national circumstances in line with
our Toronto commitment, pursuing appropriate monetary policy, enhancing
exchange rate flexibility to better reflect underlying economic
fundamentals and structural reforms, to sustain global demand, increase
potential growth, foster job creation and contribute to global
rebalancing.

We discussed progress made since the Seoul Summit and stressed the
need to reduce excessive imbalances and maintain current account
imbalances at sustainable levels by strengthening multilateral
cooperation. We agreed on a set of indicators that will allow us to
focus, through an integrated two-step process, on those persistently
large imbalances which require policy actions.

To complete the work required for the first step, our aim is to
agree, by our next meeting in April, on indicative guidelines against
which each of these indicators will be assessed, recognizing the need to
take into account national or regional circumstances, including large
commodity producers. While not targets, these indicative guidelines will
be used to assess the following indicators: 1.) Public debt and fiscal
deficits; and private savings rate and private debt 2.) and the external
imbalance composed of the trade balance and net investment income flows
and transfers, taking due consideration of exchange rate, fiscal,
monetary and other policies.

We also adopted a timetable for developing the 2011 action plan
that will implement our Framework for Strong, Sustainable and Balanced
Growth and monitor the commitments already made. As agreed in Seoul, we
call on the IMF to provide an assessment as part of the Mutual
Assessment Process on progress towards external sustainability and
consistency of policies at our October meeting.

At that time, we will also review a report on the MAP including an
action plan informed by the analysis on the root causes of persistently
large imbalances based on the agreed guidelines. We will also review an
assessment of progress made in meeting commitments made in Seoul.

The international monetary system (IMS) has proven resilient, but
vulnerabilities remain, which raise the need to improve it in order to
ensure systemic stability, promote orderly adjustment, and avoid
disruptive fluctuations in capital flows, disorderly movements in
exchange rates – including advanced economies with reserve currencies
being vigilant against excess volatility – and persistent misalignment
of exchange rates.

Today we agreed on a work program aimed at strengthening the
functioning of the IMS, including through coherent approaches and
measures to deal with potentially destabilizing capital flows, among
which macro-prudential measures, mindful of possible drawbacks; and
management of global liquidity to strengthen our capacity to prevent and
deal with shocks, including issues such as Financial

Safety Nets and the role of the SDR. This will also require
discussions on exchange rates issues and on the strengthening of IMF
surveillance. We look forward to discussing at our next meeting in April
a report from the IMF on the strengthening of the IMS and reports by the
World Bank and the RDBs building on experiences, on actions to
strengthen local capital markets and domestic currency borrowing in
emerging and developing economies. In addition, we will benefit from the
work of OECD on capital flows, and from the contributions of other
relevant international organizations, such as UNCTAD.

We discussed concerns about consequences of potential excessive
commodity price volatility and asked our deputies to work with
international organizations and to report back to us on the underlying
drivers and the challenges posed by these trends for both consumers and
producers and consider possible actions.

Keeping in mind the impact of this volatility on food security, we
reiterated the need for long-term investment in the agricultural sector
in developing countries. We welcomed the interim report by the IEF, IEA
and OPEC to improve the quality, timeliness and reliability of the Joint
Organization Data Initiative Oil (JODI oil) and call for further work on
strategies to implement these recommendations to be detailed in their
final report.

Building on the Riyadh symposium held on January 24th, we encourage
the IEF to provide concrete strategies to improve the producer-consumer
dialogue at its next meeting on February 22nd 2011. Following our
Leaders’ request, we call on the IMF and IEF, as well as IEA, GECF and
OPEC, to develop by October 2011 concrete recommendations to extend the
G20’s work on oil price volatility to gas and coal.

We look forward to discussing at our next meeting the report of
IEF, IEA, OPEC and IOSCO on price reporting agencies as well as the
interim report on food security currently being undertaken by the
relevant international organizations, and IOSCO’s recommendations, and
the FSB’s consideration of next steps, on regulation and supervision of
commodity derivatives markets notably to strengthen transparency and
address market abuses.”

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–Paris newsroom, +331-42-71-55-40; paris@marketnews.com

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