G20 Indicative Guidelines for Assessing Persistently Large Imbalances 1. Our aim is to promote external sustainability and ensure that G20 members pursue the full range of policies required to reduce excessive imbalances and maintain current account imbalances at sustainable levels. 2. In February we agreed on a set of indicators that will allow us to focus through an integrated 2-step process on those persistently large imbalances that require policy action. These indicators are (i) public debt and fiscal deficits; and private savings rate and private debt (ii) and the external imbalance composed of the trade balance and net investment income flows and transfers, whilst taking due consideration of exchange rate, fiscal, monetary and other policies. 3. To complete the first step, we have agreed today on indicative guidelines against which each of these indicators will be assessed. While not policy targets, these guidelines establish reference values for each available indicator allowing for identification of countries for the second step in-depth assessment. Four approaches will be used: 1. A structural approach, which is based on economic models and grounded in economic theory, which benchmarks G20 members against each indicator in a way that takes into account specific circumstances including large commodity producers (e.g. its demographic profile, oil balance or trend growth). 2. A statistical approach which benchmarks G20 countries on the basis of their national historical trends. 3. A statistical approach which benchmarks G20 country's historical indicators against groups of countries at similar stages in their development. 4. A statistical approach which draws on data, benchmarking G20 country's indicators against the full G20. 4. Statistical approaches are based on the 1990 to 2004 period, as this is the period that preceded the large build up in external imbalances. Reference values drawn from 1990-2010 were also provided as a complement. In all four approaches, forecast figures over the 2013-15 period are compared to the values suggested by the guidelines to determine whether or not an in depth assessment should be undertaken. Those countries identified by at least two of the four approaches as having persistently large imbalances will be assessed in-depth to determine in a second step the nature and root causes of their imbalances and to identify impediments to adjustment. In carrying out this assessment, we will take due account of the exchange rate and monetary policy frameworks of members. For members of the euro area with its governance framework, this assessment will involve the appropriate authorities. National circumstances will also be taken into account. In the second step assessment, the independent IMF analysis will rely on IMF forecast data, while countries' own assessments can use national data. 5. For the identification of countries that will move into the second stage, the selection rules for G20 countries accounting for more than 5 % of G20 GDP (on market exchange rates or PPP exchange rates) will reflect the greater potential for spillover effects from larger economies.