TEXT-Canada PM Harper's letter to G20 on deficits

OTTAWA, June 18 (Reuters) - The following is an excerpt from a letter sent by Canadian Prime Minister Stephen Harper to his G20 counterparts this week and released on Friday.

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As leaders, our primary objective must be to encourage economic growth and promote job creation for our citizens. The fiscal stimulus we have implemented was necessary to protect our economies from a much worse crisis. It worked. But, we are not out of the woods yet. The recovery in private demand is not yet assured in all G-20 countries and new risks have emerged. To sustain recovery, leaders from advanced countries, to the extent possible, need to reaffirm their intent to follow through on delivering existing stimulus plans. At the same time, 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 our future growth prospects. We should agree that these plans will halve deficits by 2013 and stabilize government debt-to-GDP ratios, or put them on a downward path by 2016. These targets should be a minimum as some of us will meet these objectives sooner. Fiscal consolidation can only succeed, if we take concerted actions across the G-20 to support global demand, reduce the unacceptably high rates of unemployment and reduce global poverty. The G-20 Framework for Strong, Sustainable and Balanced Growth is the key mechanism through which we can address these challenges. As such, we must agree on a set of policies that includes: - development and implementation of clear, credible and growth friendly fiscal consolidation plans in advanced economies; - actions to accelerate financial sector repair and reform; - support for stronger internal sources of growth in emerging markets by improving social safety nets, increasing investments in infrastructure and adopting more flexible exchange rates; - reform of product and labour markets in all G-20 countries to boost our growth potential; and - extension of the Washington Standstill to resist new protectionist measures. At a time when market uncertainty persists, it is imperative that we deliver credible and real measures that show we are committed to a sustained and durable recovery to the benefit of all our citizens. The rewards will be significant: the International Monetary Fund (IMF) estimates that global output could be raised by US$4 trillion, 52 million new jobs created and 90 million people lifted out of poverty, compared to an outlook where we follow a less ambitious reform agenda. Failure to deliver is not an option. We have a responsibility to our citizens, and indeed to all citizens, to strive for the best possible outcomes.