* First reform sketches fall well short of what is needed
* G20 countries to review each others' revised reform plans
* Euro zone deflation risk might be discussed, but not key
issue for whole G20
By Jan Strupczewski
BRUSSELS, April 7 The world's financial leaders
will agree this week to be more ambitious with structural
reforms to boost global growth after draft plans showed them
falling short, an official involved in preparations for a G20
Finance ministers and central bank governors from the
world's 20 biggest economies (G20) will meet on Thursday in
Washington to review progress on a deal to raise the world's
economic growth through reforms of labour markets, trade,
investment and making industry more competitive.
All 20 countries have already submitted sketches of the
reforms they want to introduce for the scrutiny of the
International Monetary Fund (IMF) and the Organisation for
Economic Cooperation and Development (OECD).
The target is to boost global output by an extra 2 percent
over 5 years - but the sketches showed the countries falling
"A first assessment ... showed that the level of ambition
was insufficient and that final growth strategies should deliver
significantly more in terms of structural reforms in order to
live up to the commitments taken by the G20 in Sydney," European
Union finance ministers said in a document prepared for the G20.
"More ambitious and meaningful commitments in the agreed
priority areas: investment, employment and trade and
competition... need to figure in the preliminary growth
strategies which are due by May 2," said the document, seen by
The reform plans need to be quite specific because the OECD
and the IMF should be able to quantify them, the official said,
although in some cases quantification can prove difficult.
"G20 ministers will recognise the sketches are not able to
produce the 2 percent extra growth and they will give a mandate
to their officials to add new measures in order to try to reach
2 percent," the G20 official said.
"They will say that in the growth strategies there must be a
further collective effort to proceed in terms of structural
reforms," he said.
Once the revised plans are in, each G20 country will review
the ideas of two of its peers, looking for weaknesses.
"The point of the peer review is to push further the level
of ambition," the G20 official said.
Reviewed and amended plans will be submitted to G20 finance
ministers at their meeting in September and then approved by G20
leaders at their summit in November.
FED, ECB MONETARY POLICY
The discussion on growth strategies is the main item on the
ministers' agenda together with a discussion on ways to limit
the negative spillover effects on the world economy from
withdrawing the extraordinary monetary stimulus in the U.S.
"There will be scenarios to see different types of monetary
adjustment spillovers in a more benign scenario and less benign
scenario," the G20 official said.
"That will trigger a discussion among ministers what are the
appropriate measures to avoid the less benign scenario."
Monetary policy in the euro zone, which faces a prolonged
period of low inflation, is likely to be discussed.
Unlike the Federal Reserve, which wants to withdraw its
extraordinary stimulus to the economy, the European Central Bank
is considering such a stimulus to prevent the risk of deflation.
"I would expect that this could come up in the general
discussion where there will be normalisation of monetary
policy," the official said.
"I don't expect it will be a key issue, but it is likely
that some will raise the question if more should be done in
terms of euro zone monetary policy."
"Some can mention it in the discussion. Japan has warned us
twice... that this is a risk that has to be taken seriously.
But I don't see this as a major concern of countries such as
China, Brazil or India for whom the problem is capital
volatility," the official said.
The European Central Bank said last week it was ready to
start asset purchases, also known as quantitative easing, to
tackle inflation if it proved persistently low.
(Editing by Jeremy Gaunt)