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4 November 2011

The Cannes Action Plan for Growth and Jobs

The global economy has entered a new and difficult phase. Global growth has weakened, 

downside risks have heightened, and confidence has waned. Uncertainty over the sustainability 

of public debt levels in some advanced economies has increased, and the rebalancing in 

demand from the public to the private sector and from the external to the domestic sector has 

not materialized. 

 In Europe, sovereign debt risks in some countries have generated a difficult dynamic of 

rising interest costs and stresses in the banking system, which are now weighing on 

confidence and real activity in the euro area. Growth in the euro area is now projected 

to be weaker and unemployment higher.

 In the US, the recovery has been shallower than expected. The desired rebound in 

private demand has not materialized due to a combination of weak job growth, the 

ongoing correction in the housing sector and the associated rebuilding of household 

balance sheets. More certainty and determination over medium-term fiscal 

consolidation will contribute to the strengthening of growth. 

 In emerging markets, there are also clear signs of a slowing in growth as developments 

in advanced economies begin to weigh on these countries. In some emerging market 

economies, financial stability and overheating risks remain. The lack of exchange rate 

flexibility in some countries limits policy options to deal with these risks. 

In the face of these challenges, we agree that strengthened international policy cooperation is 

needed now. We have agreed on an Action Plan to address short-term vulnerabilities and 

strengthen medium-term foundations for growth. 

We are firmly committed to support the recovery, ensure financial stability and restore 

confidence. Only through collective actions on all of these fronts will we move closer to 

stronger, more sustainable and balanced growth. Our ultimate objective is to provide more and 

better jobs for our citizens, to promote social inclusion in all countries, and to foster 

development and poverty reduction particularly in less developed countries around the globe.

We have met our Seoul commitment to develop indicative guidelines to assess persistently large 

imbalances. This Action Plan reflects the views of the G20 and draws on the IMF Staff’s 
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independent assessments of the root causes of these imbalances and recommended policies to 

address them. 

We hereby commit to decisively pursue the introduction of the following actions without delay.

Addressing Short-term Vulnerabilities and Restoring Financial Stability

We have agreed on a plan to sustain the near-term recovery, promote growth and restore 

financial stability in a manner that complements our medium-term reforms:

1. We commit to take all necessary actions to preserve the stability of banking systems and 

financial markets. We will ensure that banks are adequately capitalized and have sufficient 

access to funding to deal with current risks. Central Banks continue to stand ready to 

provide liquidity to banks as required. 

2. G-20 members agree to implement an appropriate mix of measures to secure the recovery. 

a) Monetary policies will maintain price stability over the medium term and continue to 

support economic recovery. As warranted by national circumstances, including medium 

term consolidation plans, monetary policy will respond to changes in economic and 

financial market conditions subject to their likely impact on the mediumterm outlook for price developments.

b) Advanced countries, taking into account different national circumstances, will adopt 

policies to build confidence and support growth, and implement clear, credible and 

specific measures to achieve fiscal consolidation, including as set out in the country 

specific commitments below.

c) Governments in the euro area commit to take all necessary measures and actions 

needed to ensure the stability of the euro area and have adopted a comprehensive 

package. (i) After having decided to flexibilise the EFSF instruments on the 21 July 2011, 

the 26 October euro area Summit agreed on a substantial leveraging of its resources up 

to 1 trillion euro. (ii) Euro area countries agreed to significantly strengthen economic and 

fiscal surveillance and governance of the euro area. (iii) A particular effort in terms of 

fiscal consolidation and structural reforms will be made by those euro area Member 

States that are experiencing tensions in sovereign debt markets. (iv) An exceptional 

solution was found to ensure the sustainability of the Greek public debt through a 

rigorous adjustment programme and a voluntary nominal discount on Greek debt held 

by private investors. (v) Last, a comprehensive set of measures to raise confidence in 

the banking sector has been agreed, including by facilitating access to term-funding 

where appropriate and temporarily increasing the capital position of large banks to 9% 
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of Core Tier 1 capital after accounting for sovereign exposures by the end of June 2012, 

while maintaining the credit flow to the real economy and ensuring that these plans will 

not lead to excessive deleveraging.

d) Italy commits to reaching a rapidly declining debt-to-GDP ratio starting in 2012 and close 

to a balanced budget by 2013. This objective, based on the full implementation of the 60 

billion euro fiscal package approved during the summer, will be underpinned by the 

strengthening of the fiscal rules, stemming from both the European legislation and the 

introduction in the constitution of the balanced budget rule. Italy commits to 

implement, fully and swiftly, the comprehensive plan of growth enhancing structural 

reforms announced on October 26th. We support the measures presented by Italy in the 

Euro Summit and the agreed detailed assessment and monitoring by the European 

Commission. In this context, we welcome Italy's decision to invite the IMF to carry out a 

public verification of its policy implementation on a quarterly basis. 

e) The US commits to the timely implementation of a package of near-term measures to 

sustain the recovery, through public investments, tax reforms, and targeted jobs 

measures, consistent with a credible plan for medium-term fiscal consolidation.

f) Japan commits to the expeditious implementation of substantial fiscal measures for 

reconstruction from the earthquake estimated at least 19 trillion yen (about 4% of GDP), 

while ensuring the commitment to medium-term fiscal consolidation.

g) Australia, Brazil, Canada, China, Germany, Korea and Indonesia, where public finances 

remain relatively strong, taking into account national circumstances, agree to let 

automatic fiscal stabilisers work and, should global economic conditions materially 

worsen, agree to take discretionary measures to support domestic demand as 

appropriate, while maintaining their medium-term fiscal objectives. 

h) Emerging market economies commit to adopting macroeconomic policies to enhance 

the resilience of their economies and those in surplus will adopt macroeconomic policies 

to move towards more domestic-led growth, thus supporting the global recovery and 

financial stability.

3. We affirm our commitment to move more rapidly toward market-determined exchange rate 

systems and enhance exchange rate flexibility to reflect underlying fundamentals and refrain 

from competitive devaluation of currencies. The actions above should help address 

challenges created by developments in global liquidity and capital flow volatility, thus 

facilitating further progress on exchange rate reforms and reducing excessive accumulation 

of reserves. We welcome the recent changes to Russia’s foreign exchange regime to allow 

the rouble to move more in line with market forces and China’s determination to increase 

exchange rate flexibility consistent with underlying market fundamentals.
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4. We recognize the special circumstances of large commodity producers in terms of reserve 

accumulation.

5. In all policy areas, we commit to minimize the negative spillovers on other countries of 

policies implemented for domestic purposes. We reaffirm our shared interest in a strong 

and stable international financial system, and our support for market-determined exchange 

rates. We reiterate that excess volatility and disorderly movements in exchange rates have 

adverse implications for economic and financial stability. 

6. We commit that the IMF must have adequate resources to fulfill its systemic responsibilities.

Strengthening the Medium-term Foundations for Growth

We have agreed that the actions to address immediate risks to recovery must be complemented 

by sustained, broad-based reforms to boost confidence, raise global output and create jobs. 

We have agreed to a six-point plan to strengthen the medium-term foundations for growth: (1) 

commitments to fiscal consolidation; (2) commitments to boost private demand in countries 

with current account surpluses, and, where appropriate, to rotate demand from the public to 

the private sector in countries with current account deficits; (3) structural reforms to raise 

growth and enhance job creation across G-20 members; (4) reforms to strengthen 

national/global financial systems; (5) measures to promote open trade and investment, 

rejecting protectionism in all its forms; and (6) actions to promote development. Annex 

provides detailed policy commitments by all members, with the key actions summarised below:

1. Specific and concrete fiscal consolidation plans are essential to put public finances on a 

credible and sustainable track, and are key to reducing current account deficits (raising 

national savings), which will further promote global rebalancing in a number of large 

countries. 

a) Australia, Canada, France, Germany, Italy, Korea, Spain, the UK, and the US reaffirm their 

Toronto commitment to clear and credible fiscal consolidation plans to halve deficits by 

2013 from 2010 levels, and stabilise or reduce government debt-to-GDP ratios by 2016. 

These plans will be robust to a range of economic outcomes, informed by prudent 

economic assumptions and, in some cases, reinforced with fiscal rules that take into 

account the economic cycle. In particular:

o The United States commits to place its debt-to-GDP ratio on a declining path no later 

than the middle of the decade through a balanced deficit reduction plan that builds 

on the Budget Control Act of 2011, which enacted about $1 trillion in discretionary 

savings over the next ten years and locked in at least an additional $1.2 trillion in 

deficit reduction beyond that. The plan will include: additional spending reductions, 
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among them reforms to entitlement programs; tax reform that raises revenue, 

lowers rates, and cuts tax loopholes and expenditures; and stronger budgetary rules 

to enhance predictability and credibility. In combination with the Budget Control Act, 

these reforms will yield a total deficit reduction of $4 trillion over 10 years.

o France commits to reducing its fiscal deficit to 3% in 2013 through: tighter limits on 

central government and health insurance expenditure; better targeted social 

transfers; a growth-friendly reduction of tax expenditures; and the inscription of 

existing fiscal rules into the Constitution to anchor stability.

o The UK reaffirms its commitment to its planned fiscal consolidation and the detailed 

four-year departmental expenditure plans set out in the 2010 Spending Review. It 

will also undertake structural reforms, including measures to ensure growth-friendly 

fiscal adjustment and measures to address long-term spending pressures and 

imbalances, such as managing future increases in the state pension age more 

systematically in response to changes in longevity.

b) Japan commits to implementing the “Definite Plan for the Comprehensive Reform of

Social Security and Tax” which sets out policies including the gradual increase in the 

consumption tax to 10% by the middle of this decade and to submitting implementing 

legislation by the end of FY2011 to realise these policies, in order to meet its Toronto 

commitment.

c) India commits to strengthening revenue mobilization through tax reforms, including a 

unified goods and services tax, and overhauling the personal and corporate tax code.

2. Countries with large current account surpluses and those with relatively weak private 

demand will play an important role in rebalancing and sustaining global demand. 

a) Germany will implement measures to promote private consumption and investment, 

with the expectation that, expressed as a share of GDP, both components will increase 

over time. Germany commits to taking measures aimed at strengthening domestic 

demand, including by alleviating inefficiencies that may underpin low investment and 

high private savings.

b) Recognizing that private demand has been relatively weak in recent years, Japan will 

implement measures to promote private consumption and investment with the 

expectation that, expressed as a share of GDP, both components will increase over time. 

This includes accelerating the implementation of the “New Growth Strategy” comprising 

policies that will boost demand for a range of services

c) China will rebalance demand towards domestic consumption by implementing measures 

to strengthen social safety nets, increase household income and transform the economic 

growth pattern. These actions will be reinforced by ongoing measures to promote 
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greater exchange rate flexibility to better reflect underlying economic fundamentals, and 

gradually reduce the pace of accumulation of foreign reserves.. 

d) Other surplus economies recognise that they too have a significant role to play in 

promoting global rebalancing and commit to encourage private spending (Indonesia, 

Korea). Indonesia has announced a national plan for infrastructure that will significantly 

increase private investment.

3. Further progress on structural reforms is critical to raising output in all G-20 countries. 

a) Structural reforms will be combined with active, flexible labour market policies and 

effective labour institutions that provide incentives for increasing formal and quality 

jobs. Members commit to promote mobility and encourage participation, including tax 

and benefit reforms to reduce long-term unemployment and encourage the 

participation of older workers and women where appropriate. 

b) Members will enhance competition and reduce distortions. Actions include: 

infrastructure investment (Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa); 

supporting research, education and skills development and eliminating tariffs on 

machinery and manufacturing inputs (Canada); reform of pricing for factors of 

production, promote market-based interest rate reform in an orderly manner and 

gradually achieve RMB capital account convertibility as stated in its current 5-year plan 

(China); structural reforms in the services sector to boost productivity (France, Germany, 

Italy, Korea); tax reform aimed at a more employment-friendly taxation (Germany, Italy); 

raising standards of disclosure of information by financial institutions (Russia); phasing 

out wasteful and distortive subsidies in the medium term, while providing targeted 

support for the poor (India, Indonesia); reforms to energy efficiency and greater use of 

renewable and domestic energy resources (Turkey), agriculture (Argentina); ; enhanced 

regional integration to promote trade and investment (South Africa); improved practices 

and enhanced oversight of the short-term financing markets and reforms to help 

promote a rise in household savings as a share of GDP (US); transitioning to a clean 

energy economy through effective carbon price mechanism (Australia) and, efforts to 

promote green growth (Korea).

c) The EU is fully committed to accelerate and further deepen the Single Market 

integration through a comprehensive programme based on twelve key priority actions to 

boost growth. These include actions in the areas of services, trans-European networks, 

the digital single market, workers' mobility, financing for small and medium-sized 

enterprises and taxation. In the framework of the 'Europe 2020' strategy, the EU 

adopted several targets for 2020: to raise to 75% the employment rate for those aged 

20-64, to improve the education levels, and to raise the share of public and private 

investment levels in R&D to 3% of EU's GDP.
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d) We recognize the importance to the global economic recovery of maintaining stability in 

international oil markets, at a level consistent with global economic growth, as well as 

increasing transparency of energy policies in all countries. 

e) Saudi Arabia is committed to continue playing its systemic role in stabilizing the oil 

markets in support of the global economy.

4. We commit to the full and timely implementation of the financial sector reform agenda 

agreed up through Seoul, including: implementing Basel II, II.5 and III along the agreed 

timelines; more intensive supervisory effort; clearing and trading obligations for OTC 

derivatives; standards and principles for sounder compensation practices, achieving a single 

set of high quality global accounting standards; a comprehensive framework to address the 

risks posed by systemically-important financial institutions; and, strengthened regulation 

and oversight of shadow banking. We endorsed the joint IMF/WB/FSB report on financial 

stability issues in emerging markets and developing economies.

5. We reaffirm our commitment to resist protectionism in all forms, rectify WTO inconsistent 

measures and advance the multilateral trade agenda, as agreed in Toronto. 

6. While reducing barriers to trade and investment will help reduce the development gap and 

support progress towards the Millennium Development Goals, further efforts to support 

capacity building and channelling of surplus savings for growth-enhancing investments in 

developing countries, including infrastructure development, would also have positive 

spillovers for global growth, rebalancing and development. 

a) Improved market access for least developed countries should be complemented with a 

strengthening of trade facilitation, trade finance and aid-for-trade programs to enhance 

their trade capacity. 

b) Developing countries have the potential to contribute to stronger and more balanced 

global growth and should be viewed as markets for investment, especially in 

infrastructure. We welcome the MDBs Infrastructure Action Plan and the HLP 

recommendations. It is important to ensure adequate flows of official financing for 

development as well as to promote innovative approaches that leverage private capital.

We will also hold ourselves accountable for meeting our commitments to address near-term 

vulnerabilities and move ahead on reforms (see Annex). We will enhance our reporting and 

monitoring in 2012 and future years, developing a framework to assess progress against our 

commitments for the reform of our fiscal, financial, structural, and monetary and exchange rate, 

trade and development policies. As agreed in Seoul, we will continue to use the indicative 

guidelines as a mechanism to assess progress in rebalancing, and the consistency of fiscal, 

monetary, financial sector, structural, exchange rate and other policies. 
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We will continue to coordinate policy in the future as economic conditions evolve. Our 

Framework for Strong, Sustainable and Balanced Growth is not a point in time exercise, but a 

dynamic process to adjust to developments.

We ask our Finance Ministers to work closely together in the coming months to address 

vulnerabilities and sustain recovery.