By Cho Jin-seo
The G20 countries will produce a specific numerical target on their current account balance at the upcoming Seoul Summit on Nov. 12, a high-ranking official at the Korean government confirmed Tuesday.
The reassurance disperses the confusion and uncertainty regarding the Korean government’s stance on this sensitive issue, which had been opposed by some countries like Germany and Japan at the Gyeongju finance ministers’ meeting 10 days ago. At the time, the G20 had only agreed to refer to a more ambiguous “indicative guideline” rather than listing specific figures.
“At the Seoul Summit, there will be numbers,” the official told reporters from foreign press and English newspapers on the condition of anonymity. He has been deeply involved in the G20 process ever since the beginning.
“Determining a number is not everything, but it is important,” he said, though he didn’t elaborate on what the number would be.
He added that the current account cap will be a part of a broader policy guideline for each nation, which will be drawn up in details at the Summit.
Seoul and Washington have proposed to put a 4-percent cap on current account surplus and deficit in Gyeongju, as a commitment to reduce the “global imbalance.” By setting a cap, they want to control the flow of money from deficit countries like the United States toward surplus countries like China and Germany.
Through bilateral talks, the deal-brokers of Seoul had almost secured agreement from each G20 nation, but some countries raised objections on the eve of the Gyeongju meeting, he said.
Top G20 officials in Seoul have been divided over the issue, as was reported by The Korea Times last week. Right after the Gyeongju meeting, a top G20 negotiator said that it “would be actually better not to have a specific target” because that can make things too complicated due to practical and political obstacles.
Even President Lee Myung-bak had said he was unsure about it until recently.
“Right now I do not know if I can tell you whether or not we are going to work towards a specific numerical target,” he had said during an interview with The Financial Times last week.
But now, consensus was made inside the Korean government, the high-ranking official said. “You ask the same person today, and he will tell you differently,” he said, referring to the person who had spoken of preferring a more qualitative approach.
No cap on FX reserve
The government official also said that the G20 will not talk about each country’s foreign exchange reserve at the Seoul Summit. Some papers have been circulating the idea recently.
As for other agenda, he said there will be some surprising announcement regarding the economic development of poor nations.
“There are some innovative projects to be announced on the development agenda,” he said.
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