TORONTO — Leaders of the world’s biggest economies agreed Sunday on a timetable for cutting deficits and halting the growth of their debt, but also acknowledged the need to move carefully so that reductions in spending did not set back the fragile global recovery. 
 
 The action at the Group of 20 summit meeting here signaled the determination of many of the wealthiest countries, after enacting spending programs to counter the worldwide financial crisis, to now emphasize debt reduction. And it underscored the conviction of European nations in particular that deficits represented the biggest threat to their economic stability. 
 
 President Obama and Treasury Secretary Timothy F. Geithner had consistently advocated a measured approach to debt reduction that would not stymie growth and lead to a double-dip recession. 
 
 The United States, however, joined other countries at the summit meeting, which was met by protests and several hundred arrests, by endorsing a goal of cutting government deficits in half by 2013 and stabilizing the ratio of public debt to gross domestic product by 2016. Canada’s prime minister, Stephen Harper, had proposed the targets, backed by Germany and Britain. 
 
 To assuage objections from the United States, Japan, India and some other countries, the timetable was couched as an expectation, rather than a firm deadline. The G-20 joint statement explicitly stated that Japan, which is heavily dependent on domestic borrowing, was not expected to meet the targets. 
 
 The divisions were in contrast to the unity that characterized the previous three G-20 leaders’ summits, when the urgency of a potential global collapse produced solidarity and a unified economic approach. Although Mr. Obama insisted emphatically that there was “violent agreement” on the need to reduce debt over time, the final communiqué included a delicately worded call for deficit reduction “tailored to national circumstances.” In essence, the leaders were blessing their decision to go their own ways. 
 
 The joint statement acknowledged both sides of the debate. “There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery,” the statement said. “There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth.” 
 
 In a news conference at the conclusion of the summit meeting, Mr. Obama referred only indirectly to the disagreement with Europe, saying, “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs today.” 
 
 His concern about stimulus was echoed by some economists who viewed the pledge on deficits as imperiling the prospects for growth. 
 
 “China’s growth, specifically, is not seen as sustainable at current rates,” Ronald A. Kurtz, professor of global economics and management at the Massachusetts Institute of Technology, said in an e-mail message. “The G-20 declaration therefore amounts to saying ‘assume a miracle’ for global growth.” He said Europe’s fiscal austerity plans would also slow growth. 
 
 But Dominique Strauss-Kahn, head of the International Monetary Fund, said he thought the risks of a new downturn were minimal. 
 
 “We don’t forecast any double dip,” he said. “Double dip was not discussed at the meeting.” 
 
 It is the first time the G-20 has set dates for deficit reduction, but the timetable, which is not binding, will probably not require new policy actions. Most of the governments, including the United States, have already put forward budget proposals in line with the targets. 
 
 The leaders also discussed banking regulations, but could not agree on a proposal for a global bank tax, supported by the United States, Britain and the European Union, but opposed by Canada and Australia. 
 
 And while the G-20 reaffirmed a deadline — their next meeting, in November in Seoul, South Korea — for agreeing on new capital standards for banks, they signaled that several countries might not implement the standards by 2012, as initially planned. 
 
 “While the illusion of progress is good, I don’t see real action to alter the imbalances that brought us to this crisis,” said Raghuram G. Rajan, a former chief economist at the International Monetary Fund who is now a professor in the Booth School of Business at the University of Chicago. 
 
 The United States, he said, continues to run large trade deficits financed by Germany, China and Japan. “The U.S. has been the world’s consumer of first resort,” he added, “and because it has been unable to persuade other countries to spend more or to reform quickly, it is likely to take up that position once again.” 
 
 Though Mr. Obama did not prevail in his emphasis on stimulus, he did arrive in Canada with three victories under his belt. 
 
 European leaders had agreed to conduct stress tests on their big banks, an exercise successfully undertaken in the United States last year, in an effort to restore market confidence. China had announced that it would allow a gradual appreciation of its currency. And Congressional negotiators had agreed on a far-reaching overhaul of financial regulations. 
 
 But those accomplishments did not alter the mix of lagging growth, heavy debts and anxious voters that pushed European leaders to press for austerity. 
 
 “The U.S. may be concentrated on premature fiscal tightening, but most other countries are looking with a nervous eye to the sovereign debt mess in Europe,” said Kenneth S. Rogoff, a Harvard economist and former I.M.F. chief economist. “Aiming for a gradually improving debt-to-G.D.P. ratio by 2016 is hardly wild-eyed fiscal conservatism.” 
 
 In that light, the G-20 outcome was a victory for Chancellor Angela Merkel of Germany, who argued that without actions to rein in spending, investors would drive up governments’ borrowing costs, as they did in Greece. 
 
 Mr. Obama said, “We helped to draft this communiqué, which reflects our policies,” and added, “Keep in mind that we had already proposed a long time ago that we were going to cut our deficits in half by 2013.” 
 
 He continued, “We can’t all rush to the exits at the same time.” But he also said that for all the talk of German austerity, it was actually reducing its spending gradually, and not any more quickly than the United States. 
 
 While aides to Mr. Obama said that the G-20 statement was in line with budget plans he had already announced, others said it was a move toward austerity. 
 
 “The best thing that countries with fiscal challenges can do is to show that they can live within their means,” George Osborne, Britain’s chancellor of the Exchequer, said. “Barack Obama has recognized that.” 
 
 The mood here was far less anxious than in November 2008, when the G-20 leaders converged for the first time, in Washington, to battle a still-raging financial crisis. But it was hardly cheery. 
 
 While China did not make any new commitments, the G-20 statement appealed to China to increase spending on infrastructure, let its currency fluctuate and strengthen social protections. 
 
 Those actions are part of what economists call rebalancing — a reorientation of the world economy to be less reliant on debt-financed spending by North American and Western European consumers. China is the largest growth engine but its workers save too much and spend too little, some economists say. 
 
 At China’s urging, the G-20 leaders removed from their joint statement a proposed clause that would have praised China for agreeing to greater exchange-rate flexibility. Mr. Harper said he understood China’s wish not to be singled out, for either criticism or praise, but added, “When you make commitments on the world stage, you will be held accountable for them.” ||||| TORONTO -- President Obama warned Sunday that the world economic recovery remains "fragile" and urged continued spending to support growth, an expansionist call at the end of a summit marked by an agreement among developed nations to halve their annual deficits within three years. 
 
 The president's remarks tempered the Group of 20's headline achievement at the summit, a deficit-reduction target that had been pushed by Canadian Prime Minister Stephen Harper, the host of the meeting and a fiscal conservative. Although there is broad agreement that government debt in the developed world needs to be reduced, there is concern that cutting too fast and too deeply will slow growth and possibly spark a new recession. 
 
 In a news conference at the meeting's conclusion, Obama said that the world's largest economic powers had agreed on the need for "continued growth in the short term and fiscal sustainability in the medium term." 
 
 "A number of our European partners are making difficult decisions," Obama said. "But we must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today." 
 
 The group's closing statement included the specific deficit-reduction target, but it was couched in caveats -- that deficit reduction needed to be "calibrated" to avoid harming growth, paced differently in each country and paired with other reforms to strengthen the economy. 
 
 Obama and European leaders, in particular, came to the meeting with sharply different views of the strength of the global economic recovery, with the U.S. president more pessimistic. The declaration, in the works for weeks, gave each side what it wanted, although the specific deadlines went further than the Obama administration had preferred before the meeting. 
 
 The administration accepted the deadlines in order to avoid standing against Harper and such important economic powers as Germany. In his closing remarks, Obama stressed that "every country will chart its own unique course, but make no mistake -- we're moving in the same direction." 
 
 The International Monetary Fund's managing director, Dominique Strauss-Kahn, called the deficit target an "oversimplification" of the problem; he said it was more important for individual countries to craft the right economic policies to sustain growth, not blindly cut for the sake of meeting a goal. 
 
 Along with pledging to cut their annual budget deficits by 2013, the developed countries committed to stabilizing their overall debt by 2016. Obama recently set similar goals for the United States. 
 
 Despite the seeming division between the United States' deficit-reduction target and the slower approach favored by Canada and Germany, Obama said there was "violent agreement" within the group about the need to find proper balance -- with some highly indebted countries such as Greece needing to cut immediately and others supporting the recovery with higher spending. 
 
 Overall, the group's final statement reflects its consensus theory for how the world economy needs to change, with the heavily indebted Western nations steadily taming government deficits, and surplus-rich nations "rebalancing" to boost local spending and demand. 
 
 Strong emerging markets such as China, the document said, need to guard against a slowdown by encouraging their governments and people to spend more, investing more on infrastructure, establishing better social safety nets to give families more income, and allowing exchange rates to fluctuate more freely -- a quiet reference to China's managed currency policies. China is a member of the G-20. 
 
 "Advanced surplus" countries -- developed nations that run large trade surpluses -- committed to try to narrow the gap between imports and exports, a particular concern in Europe, where Germany's powerful export-led economy is blamed by some for economic weakness in Greece and elsewhere. 
 
 But the G-20 delegations also left Toronto with much of the heavy lifting on new global financial rules still ahead of them. 
 
 Discussion of a global bank tax -- once considered a major issue for the group -- ended with a commitment that the financial sector would make a "fair" contribution to the cost of resolving financial crises, but leaving it to each nation to decide how and when the contribution would be collected. 
 
 The group also committed to requiring banks worldwide to hold a "significantly higher" amount of capital to buffer them against financial shock. But acknowledging the difficulty that will pose to some institutions, the group's statement opened the door for a transition period to give weaker companies time to raise the funds. 
 
 The G-20 hopes by the end of this year to have new capital rules for banks in place, and leaders consider the issue a core element of global financial reform. But an early test of proposed bank capital rules found that they risked undermining economic growth. Even banks in relatively healthy systems, such as Canada, would have been in a bind and forced to raise substantial new funds, according to bankers and officials familiar with the matter. 
 
 "We have the confluence of two forces. One is about making sure there are no more crises, but we have to make sure we don't destroy our domestic banking systems," said Hyun Song Shin, senior economic adviser to the South Korean government. "What you don't want to do is strangle bank lending." ||||| REUTERS/Eric Thayer This just in: credit rating agency Fitch has revised the outlook for the U.S.A.'s AAA credit rating to negative from stable. 
 
 The news comes just as the latest talks in Washington, D.C. over how to raise the debt ceiling and end the government shutdown seem to be falling apart. 
 
 "The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.," said Fitch in a press release. "This 'faith' is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns." 
 
 Fitch and Moody's still rate the U.S. AAA, the highest credit rating on the scale. 
 
 S&P;, the other of the three key rating agencies, stripped America of its AAA rating back in 2011 during the last debt ceiling crisis, citing political instability as the key driver of the downgrade. 
 
 Below is the full text of the Fitch release. 
 
 --------------------------------------- 
 
 Fitch Ratings-New York/London-15 October 2013: Fitch Ratings has placed the United States of America's (U.S.) 'AAA' Long-term foreign and local currency Issuer Default Ratings (IDRs) on Rating Watch Negative (RWN). The ratings of all outstanding U.S. sovereign debt securities have also been placed on RWN, as has the U.S. Short-term foreign currency rating of 'F1+'. The Outlook on the Long-term ratings was previously Negative. 
 
 The U.S. Country Ceiling has been affirmed at 'AAA'. 
 
 Fitch expects to resolve the RWN by the end of Q114 at the latest, although timing would necessarily reflect developments and events, including the duration of any agreement to raise the debt ceiling. 
 
 KEY RATING DRIVERS 
 
 In line with Fitch's previous statements, the RWN reflects the following key rating drivers and their relative weights: 
 
 High 
 
 - The U.S. authorities have not raised the federal debt ceiling in a timely manner before the Treasury exhausts extraordinary measures. The U.S. Treasury Secretary has said that extraordinary measures will be exhausted by 17 October, leaving cash reserves of just USD30bn. Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default. 
 
 - Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritise debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of U.S. sovereign creditworthiness and the economy. 
 
 - The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S. This "faith" is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns. 
 
 Medium 
 
 - The repeated brinkmanship over raising the debt ceiling also dents confidence in the effectiveness of the U.S. government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the U.S. economy. 
 
 The 'AAA' rating reflects the U.S.'s strong economic and credit fundamentals, including: 
 
 - Its highly productive, diversified and wealthy economy; extraordinary monetary and exchange rate flexibility; and the exceptional financing flexibility afforded by the global reserve currency status of the U.S. dollar and the depth and liquidity of domestic capital markets - in particular the U.S. Treasury market. The U.S. sovereign credit profile also benefits from the respect for property rights, the rule of law and a high degree of social stability. 
 
 - Fitch continues to judge that the U.S. economy (and hence tax base) remains more dynamic and resilient to shocks than its high-grade rating peers. Fiscal and macroeconomic risks emanating from the financial sector are generally low and diminishing and becoming supportive of, rather than a drag on, economic growth. Fitch forecasts economic growth to pick up from 1.6% in 2013 to 2.6% in in 2014 and to average 3% over 2015-17, before reverting to its assumed long-run trend growth rate of 2.25%. The projected recovery is supported by easing headwinds from private sector debt deleveraging, a pick-up in the housing market and a gradual decline in unemployment. 
 
 - The 'AAA' rating also reflects the halving of the federal budget deficit since 2010, which is now approaching a level consistent with debt stabilisation. The Budget Control Act passed in August 2011 implied significant fiscal consolidation and Congress and the Administration have adhered to the automatic spending cuts - the sequester - specified under the Act in the absence of agreement on an alternative and equivalent set of deficit-reduction measures. In addition, the passage of the American Taxpayer Relief Act on 1 January 2013, which implied a tax increase of more than USD600bn, has also contributed to the deficit reduction effort. 
 
 - Fitch's medium-term fiscal projections imply federal and general government (which includes states and local governments) gross debt stabilising next year and over the remainder of the decade at around 72% and 104% of GDP, respectively. This is below the 80% and 110% thresholds that Fitch previously identified as being inconsistent with the U.S. retaining its 'AAA' status. 
 
 - Nevertheless, public debt stabilisation at such elevated levels still render the US economy and public finances vulnerable to adverse shocks and in the absence of additional spending reform and revenue measures, deficits and debt will begin to rise again at the end of the decade. The U.S. is the most heavily indebted 'AAA' rated sovereign, with a gross debt ratio equivalent to double that of the 'AAA' median. 
 
 RATING SENSITIVITIES 
 
 The RWN reflects the following risk factors that may individually or collectively result in a downgrade of the ratings: 
 
 - Failure by the government to honour interest and/or principal payments on the due date of U.S. Treasury securities would lead Fitch to downgrade the U.S. sovereign IDR to 'Restricted Default' (RD) until the default event was cured. We would also downgrade the rating of the affected issue(s) to 'B+' from 'AAA', the highest rating for securities in default in expectation of full or near-full recovery. Debt securities approaching maturity or those with approaching coupon payments would be vulnerable to a downgrade. The Country Ceiling would likely remain 'AAA'. 
 
 In the event of a deal to raise the debt ceiling and to resolve the government shutdown, which Fitch expects, the outcome of a subsequent review of the ratings would take into account the manner and duration of the agreement and the perceived risk of a similar episode occurring in the future. It would also reflect Fitch's assessment of the following main factors: 
 
 - The impact of the debt ceiling brinkmanship and government shutdown on our assessment of the effectiveness of government and political institutions, the coherence and credibility of economic policy, the potential long-term impact on the U.S. sovereign's cost of funding and cost of capital for the economy as a whole, and the implications for long-term growth. 
 
 - Our assessment of the prospects for further deficit-reduction measures in future years necessary to contain government deficits in the face of long-term spending pressures and place public debt on a downward path over the medium to long term. 
 
 KEY ASSUMPTIONS 
 
 Fitch continues to believe that an agreement will be reached to end the current political impasse and raise the U.S. debt ceiling. Even if the debt limit is not raised before or shortly after 17 October, we assume there is sufficient political will and capacity to ensure that Treasury securities will continue to be honoured in full and on time. 
 
 Fitch's federal debt projections reflect its economic and fiscal policy assumptions and were detailed in the Special Report, 'U.S. Medium-Term Fiscal Projections - An Update' (dated 28 June 2013; see link below). Subsequent to that analysis, the Bureau of Economic Analysis revised the level of GDP up by around 3.4% due to revisions in the way GDP is calculated, including reclassifying spending on R&D; and intellectual property as investment. This has had the statistical effect of lowering debt/GDP ratios, but has not significantly affected the trajectory of debt dynamics or its sensitivity to shocks. Since the June review, Fitch has revised down its forecasts for GDP growth for 2013 to 1.6% from 1.9% and for 2014 to 2.6% from 2.8%. 
 
 Fitch's medium-term fiscal projections incorporate assumptions regarding the medium-term growth potential of the US economy and do not incorporate potential upside benefits from shale gas or downside risks emanating from the eurozone and elsewhere. They draw heavily upon Congressional Budget Office (CBO) projections, including CBO assumptions and judgements regarding the take up of various benefits as well as the rate of growth of health care spending. 
 
 Financial sector risks are currently judged to be low as reflected by Fitch's stable outlook for the U.S. banking sector. 
 
 Contact: Primary Analyst Ed Parker Managing Director +44 20 3530 1176 Fitch Ratings Limited 30 North Colonnade London E14 5GN 
 
 Secondary Analyst Tony Stringer Managing Director +44 20 3530 1219 
 
 Committee Chairperson Douglas Renwick Senior Director +44 20 3530 1045 
 
 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com; Daniel Noonan, New York, Tel: +1 (212) 908-0706, Email: daniel.noonan@fitchratings.com. 
 
 Additional information is available on www.fitchratings.com 
 
 Applicable criteria, 'Sovereign Rating Criteria' dated 13 August 2012 and 'Country Ceilings' dated 09 August 2013, are available at www.fitchratings.com.
– The leaders of the Group of 20 nations wrapped up their 2-day summit today in Toronto, striking an agreement to reduce deficits over the next 3 to 6 years without endangering the global economic rebound. The major economic powers vowed to cut their deficits in half by 2013 and "stabilize" debt by 2016 while saying the reductions would be "carefully calibrated to sustain the recovery," reports the Washington Post. The dates are not formal deadlines, thanks in large part to pressure exerted by the US and other allies—including Japan, to which the timeline doesn't apply, the New York Times notes. The American delegation was in the minority cautioning about a double-dip recession. Said one expert: "Aiming for a gradually improving debt-to-GDP ratio by 2016 is hardly wild-eyed fiscal conservatism."