Prime Minister Stephen Harper listens during a round-table meeting at the C.D. Howe Institute in Toronto on Thursday. (Frank Gunn/Canadian Press)

Prime Minister Stephen Harper says he will urge world leaders meeting later this month to make "selective" improvements to financial regulation, to avoid protectionism and use "sensible" fiscal policies to navigate the uncertain global economic waters.

Leaders are set to meet at the G20 summit in Washington on Nov. 15 to focus on the economic downturn that has roiled markets worldwide.

Harper said Thursday he will try to focus discussion not on massive changes to regulation, but "selective improvements that will dramatically improve the nature of national regulation in many countries and improve some degree of regulatory oversight and early warning at the international level."

He provided no further details.

Harper made the comments Thursday following a meeting with economists and financial leaders at the C.D. Howe Institute in Toronto.

"We want to stay open to the world," he said.

"We want to undertake good, sensible monetary and fiscal policies that will help correct world economic imbalances."

An inadequate regulatory system was one of the factors that was widely blamed for the dire financial woes in the United States, where the budget deficit in 2008 hit a record $438 billion US.

But one message that economists have made very clear, said Harper, was that Canada should not be "afraid to run a deficit if the deficit is in the best interests of the economy," said Harper.

He was quick to say, however, that "long-term, permanent structural deficits" must be avoided, and that his government will be taking more measures to curb future spending.

Over the course of the election campaign, Harper promised that his government would not run a deficit. Following the Conservatives' election win, both Harper and Finance Minister Jim Flaherty have softened that pledge, saying there would be no deficit this year, stopping short of guaranteeing against it in future budgets.

Harper will debrief premiers on G20 meeting

Before heading to the G20 meeting, Harper will gather input from Canada's premiers and territorial leaders at Monday's first ministers' meeting in Ottawa.

His plans for the meeting — a three-hour working lunch — were outlined in a letter he wrote to premiers and territorial leaders, which was obtained Thursday by the Canadian Press.

Harper said he'll ask the first ministers to "take stock" of the actions they've each taken to help strengthen the economy. He'll also provide them with the opportunity to discuss possible future actions that can be taken.

Following the G20 summit, Harper said he'll hold a teleconference to debrief premiers. He'll then meet with them early next year for a more formal meeting.

"Thereafter, finance ministers will continue their work and meet again in December to prepare the ground for a subsequent, more structured first ministers' meeting, which I propose to convene in early 2009," Harper said in the letter.

In October, Flaherty announced the government would buy $25 billion worth of bank-held mortgages in an effort to provide much-needed cash to financial institutions.