G20: Indonesia: Exit Strategy Now Would Dent Optimism

The Wall Street Journal

The finance ministers agreed to continue with economic stimulus plans

LONDON (Dow Jones)--The Group of 20 industrialized and developing countries must carefully time exit strategies from stimulus policies as premature actions would dent global market optimism, Indonesia Finance Minister Sri Mulyani Indrawati warned Friday.

Speaking in London ahead of this weekend's gathering of G20 finance ministers and central bankers, Mulyani said Indonesia was in a relatively strong fiscal position, making its exit strategy less of a concern.

However, she cautioned that the G20 should adopt a coordinated approach to avoid adversely affecting the global recovery.

"It (an early exit) would create a counterproductive effect psychologically for the market and it could prolong the recession," she said.

Mulyani said she believed there was recognition within the G20 that action needs to be taken over the issue of bankers' remuneration, but said the matter needed to addressed in a balanced way.

"The question is how specific and how stringent the regulation should be," she said. "It needs to be balanced to give room for the (finance) industry to grow in a healthy and responsible way."

Mulyani said in addition to discussions on exit policies on bankers' remuneration, she hoped the G20 would discuss the design of a new global economic model.

"It is about how are we going to design this new equilibrium that will be more sustainable and will not lead to excessively risky behavior."

Mulyani said the new economic growth model would also address issues surrounding climate change, but added that she was unsure whether this weekend's meeting would specifically look at climate change.

-By Ainsley Thomson, Dow Jones Newswires; 44 20 7842 9318, ainsley.thomson@dowjones.com

Related Articles:

Climate change funding talks stall at G20

G20 pledges tougher bank action