G20 appendix on framework for sustainable growth

ST ANDREWS, Scotland (Reuters) - Following is the text of an appendix to the communique issued by finance ministers and central bank governors at their meeting in St. Andrews, Scotland.

A FRAMEWORK FOR STRONG, SUSTAINABLE AND BALANCED GROWTH:

DEVELOPING THE 'MUTUAL ASSESSMENT PROCESS'

Shared policy objectives

1. In line with the Pittsburgh commitment, G20 Finance Ministers and Central Bank Governors at their meeting in St Andrews, reaffirmed their shared objectives of strong, sustainable and balanced growth and of raising living standards in the emerging markets and developing countries.

2. The first challenge for the G20 in using the new Framework will be the transition from crisis response to a strong, more sustainable and balanced pattern of global growth.

The G20 template for 'national and regional policy frameworks' for 2010

3. Each G20 country will set out their medium-term policy frameworks, plans and projections in the agreed template on a consistent basis with other G20 members. G20 members will indicate the key forward-looking elements of their policy frameworks and plans, outline the expected first order impact of policies on the domestic economy and, more generally, their national forecasts for key economic variables.

4. They will provide the Fund with policy frameworks and plans for the next 3-5 years, if possible. Countries can submit data based on existing products, including for example national budgetary plans and Article IV inputs. Countries should fill in as much information as they can, though it is recognized that it may not be possible for all countries to fill in every piece of information in the template. G20 members should complete the template, sharing with all other G20 countries at the same time, by the end of January 2010, if possible.

5. In addition to national submissions, the process should include submissions from the relevant European institutions in line with their areas of competence.

The role of the IMF, World Bank and other international organizations

6. In line with the Pittsburgh agreement, the IMF will assist us by providing analysis (and technical support where appropriate)of how our respective national or regional frameworks fit together and the World Bank will advise us on progress in promoting development and poverty reduction as part of the rebalancing of global growth, taking into account the relevant institutional policy setups.

7. In carrying out its analysis for the mutual assessment, the Fund should also receive input from and draw on the expertise of other international organizations, as appropriate, for both assessing G20 policies and in analyzing the impact of policy options, including: the FSB on financial policies; the ILO on labor market policies; the WTO on trade policies; and the OECD and UNCTAD, where appropriate.

The process and timetable for 2010

By end-January, if possible: G20 countries set out their national policy frameworks and plans - sending their completed templates to the IMF and sharing with other G20 members.

By mid-February: G20 countries interact with the IMF to assure quality, elaborate and clarify any information supplied in the template, where necessary, during the following 2-week period; and, to identify inconsistencies and incoherence in national assumptions, particularly between forecasts and frameworks/plans.

Mid-February to April: IMF analysis to analyze the mutual compatibility of country frameworks and policies and calculate the aggregate impact of the frameworks and policies for global economic prospects. To ensure consistency, the Fund will apply common underlying assumptions to the country-specific information/data, which may result in adjustments to forecasts where necessary.

On the basis of this analysis and inputs from the World Bank and other international organizations, and consulting countries where appropriate, the Fund will produce an initial report containing a 3-5 year forward-looking assessment of global economic prospects, conditional upon national policy frameworks and plans ('the base case scenario'), and an initial indication of any policy issues and possible alternative policy scenarios that may be useful to explore.

April (Spring meetings): Deputies, Ministers and Governors consider initial Fund analysis, discuss any policy issues, including any risks caused by inconsistencies in the collective G20 policy mix or other risks, and consider and agree the different alternative policy scenarios that should be modeled by the Fund. (Other parts of national administrations will be involved where appropriate).

April-June: Fund produces policy scenarios - based on Finance Ministers' decisions taken in April, the Fund will provide more concrete analysis of how medium-term global prospects might be enhanced through collective policy actions to reach or get closer to the agreed shared objectives. The IMF will not focus on country-specific assessments or recommendations but will come forward with policy recommendations for groups of countries facing similar circumstances. The Fund's report will be modeled on the recent G20 Surveillance Notes, using simulations and discussions of alternative policy scenarios as ways to illustrate how enhanced policy coordination could help achieve better outcomes for everyone.

World Bank prepares analysis of the implications of collective G20 policies for development and poverty reduction - on the basis of national frameworks and plans and the Fund's base case scenario and alternative policy scenarios.

June: G20 mutual assessment and consideration of policy options - working on the basis of Fund analysis and inputs from the World Bank and other international organizations, the G20 will develop a basket of policy options designed to ensure that the G20 achieve their objectives, based on a range of policy scenarios. These policy options will relate to the full range of policy commitments made in Pittsburgh. G20 Deputies will prepare a report for discussion and agreement, firstly by Finance Ministers and Central Bank Governors at their preparatory meeting and then by Leaders at their Summit in June 2010. There are a number of possible publishing options - decisions on publication of the mutual assessment and policy scenarios will need to be taken nearer the time.

June to November: Refinement and updating of the mutual assessment process - with the assistance of the IMF, World Bank and other international organizations. The Fund will provide refined and updated analysis to the G20 by the end of August. If desirable, G20 countries can update their policy frameworks, plans and projections.

November: Refined mutual assessment and more specific policy recommendations for consideration and agreement by Finance Ministers and Central Bank Governors at their preparatory meeting, and by Leaders at their Summit in November 2010.