While Egypt and Tunisia, the originators of what has come to be called 'Arab Spring' movement, became the focus for immediate support for economic revival, President Obama and other heads of governments called for immediate cessation of terrorism against civilians by the Libyan regime and for the Syrian leadership to stop using force and engage in a dialogue for fundamental freedoms. The leaders reportedly agreed that the Libyan ruler, Col. Muammar Quaddafi, must quit, a stand which Russia had not so far favoured but now seems willing to negotiate a deal for his exit.

The 'Deauville Partnership' was announced in a G-8 Declaration by the Summit, chaired by French President Sarkozy, with participation from leaders from Egypt and Tunisia and Arab League, and was largely based on a report from IMF on the dimensions of a long-term programme of sustained assistance from all sources for countries of the region making progress toward political transition and economic transformation aimed at inclusive growth and employment. At least 50 to 70 million jobs would have to be created over the next decade to ensure political and social stability, IMF said while projecting the financing needs of region's oil importers alone at over 160 billion dollars during 2011-13, with a substantial part to be met from official sources.

IMF suggested that G8 could support this transformation through a long-term strategic partnership with Gulf Cooperation Council and other interested MENA countries. In the near future, the Fund said it could potentially make available 35 billion dollars as part of a broader international effort. The G-8 Declaration noted that 20 billion dollars would be available from multilateral development banks to support Egypt and Tunisia in their programmes to stabilise the economies and revive growth. President Sarkozy said another 20 billion dollars could be mobilised from GCC (10 billion) and by G8 and other bilateral donors (10 billion).

The Acting Managing Director of IMF Mr John Lipsky, who met with the Egyptian and Tunisian leaders at the Summit, said the Fund was prepared to work actively with member-countries in the region to meet their urgent financing needs and develop the strategies necessary for medium-term success. In a statement, as IMF awaits a change of guard at the head by the end of June, Mr Lipsky said IMF would continue to support the current global economic recovery, on varying speeds worldwide with some specific regional challenges, to ensure strong and balanced growth and foster employment gains.

Global economy, trade, climate change, nuclear safety, terrorism and proliferation of nuclear weapons were among the topics covered at t5heir two-day deliberations. They discussed drivers of economic growth in the United States and around the world, including innovation, green growth, and the role of the Internet, and agreed to work together to promote strong, sustainable, and balanced global growth. President Obama, who is standing for re-election in 2012, said his top priority remained to create jobs and opportunity for all Americans. The leaders reaffirmed once again their commitment to keep markets open.

On global economy, G8 leaders said that global recovery, while becoming self-sustained, faces downside risks and internal and external imbalances are still a concern. The sharp increase in commodity prices and their excessive volatility pose a significant headwind to the recovery. They agreed to remain focussed on action required to enhance the sustainability of public finances, to strengthen the recovery and foster employment, to reduce risks and ensure strong, sustainable and balanced growth, including through structural reforms.

The declaration took note of measures in Europe to tackle the sovereign debt crisis faced by a few countries and to pursue rigorous fiscal consolidation alongside structural reforms to support growth. The United States would put in place “a clear and credible medium-term fiscal consolidation framework, consistent with considerations of job creation and economic growth”. In Japan, along with reconstruction after the disaster, the authorities would also address sustainability of public finances.

On the eve of the G-8 Summit, the United Nations’ mid-2011 update on World Economy projected a slightly lower 3.3per cent in 2011 and 3.6 per cent in 2012 equivalent to 4.1 and 4.4 per cent respectively in PPP terms as against OECD estimate of 4.21 and 4.6 per cent for the two years. For India, UN revised estimates are 8.1 and 8.2 per cent (China 9.1 and 8.9) while OECD projects 8.5 and 8.6 for India in 2011/12 (China 9 and 9.2 per cent).

OECD noted that inflationary pressures in India are accelerating and “it is important RBI continues to tighten incrementally” over and above what it had done so far. There would be higher public spending under subsidy with rising energy prices and also perhaps pressure from wage hikes and increased outlays on food subsidy programmes. Eventually, Government may also have to recapitalize public sector oil marketing companies. Overall, growth will be constrained in 2011 due to rising oil prices and tighter monetary policy.

In another declaration, G8 leaders announced enhanced partnership “G8/Africa” as the continent is “on the move and is becoming a new pole for global growth” even if challenges remain to be addressed, particularly in LDCs. They said they would help the continent in meeting its economic and security challenges. Welcoming the progress towards stability and democracy in parts of Africa, they emphasized the important role of human rights, democratic governance, and sustainable development in strengthening growth and stability in Africa.

G8 statement also urged that besides official aid, African countries on the move should attract more foreign direct investment to finance economic growth by improving business climate and regulatory environment.

Although G8 leaders did not discuss the selection of the next IMF Managing Director in place of Mr Dominique Strauss-Kahn, who resigned following a sex assault case, the French President Mr Sarkozy in remarks outside, strongly backed the candidature of his Finance Minister Christine Lagarde, whom he described as “a woman of very great qualities”.

Ms. Lagarde is to make a visit to some capitals of emerging nations in this regard. “The strength of my candidacy will be on my ability to be and show independence from early on”, she said while announcing her candidature. China has said the process should be gone through “democratic negotiations” while Executive Directors on IMF Board of BRICs in a statement had urged “broad consultation” which should result in a competent person being appointed as Managing Director irrespective of his or her nationality. So far, BRICs has not named any unanimous choice of their own. (IPA Service)