G-20 to lift economy with $5 tril. stimuli, vows IMF boost+

LONDON, April 2 Kyodo - Leaders of the world's major industrialized and emerging economies resolved Thursday to lift the world economy by implementing a total $5 trillion fiscal expansion to create millions of jobs and raise global output 4 percent by the
end of 2010.

The Group of 20 leaders said in a joint statement issued at the end of their
two-day summit in London that they will provide $1.1 trillion in additional
support to restore credit and growth by boosting the resources of the
International Monetary Fund, lending by multilateral development banks and
support for trade finance.
British Prime Minister Gordon Brown said at a press conference there are ''no
quick fixes'' but that the G-20 leaders ''will do what is necessary to restore
growth and jobs, take essential actions to rebuild confidence and trust in our
financial systems and prevent a crisis such as this ever happening again.''
The premier, who chaired the second global financial summit following the
inaugural gathering in Washington in November, said the $5 trillion in
economy-boosting steps the G-20 economies announced represents ''the largest
macroeconomic stimulus the world has ever seen.''
U.S. President Barack Obama hailed the united front the 20 economies formed
despite gaps in what they consider priority matters.
''The world's leaders have responded today with an unprecedented set of
comprehensive and coordinated actions,'' Obama said.
The G-20 managed to smooth over discord about whether fiscal stimulus or
financial oversight should take precedence.
''Agreement will almost never be easy, and results won't always come quickly,''
Obama said. ''But I am committed to respecting different points of view, and to
forging a consensus instead of dictating our terms.''
As a prescription for lifting the world economy out of the worst crisis since
the Great Depression in the 1930s, the United States, Japan and Britain
advocated large stimulus packages.
Germany and France were cautious about amassing huge debts and instead called
for tighter regulations on financial institutions as a priority issue.
Japanese Prime Minister Taro Aso welcomed the G-20 deal, saying he believes the
joint statement ''sent a strong message'' that both financial market
supervision and economy boosting measures are required to overcome the economic
crisis.
Specifically, the G-20 economies said they will triple the resources available
to the IMF to $750 billion so the Washington-based lender can expand its
support for developing economies hard-hit by the crisis.
Canada, China, the European Union, Japan and Norway are among the financial
contributors to the fund, Brown and Aso said.
IMF Managing Director Dominique Strauss-Kahn indicated appreciation for the
G-20 action, saying it sent a ''powerful signal that the international
community is committed to support'' poor countries by ensuring that the fund
has the resources available.''
In addition, the G-20 ensured $250 billion in support for trade finance over
the next two years to aid economies suffering from shrinking global trade, as
liquidity has dried up in the credit market.
The major developed and emerging economies also pledged to tighten financial
regulations, standing ''ready to deploy sanctions'' on uncooperative
jurisdictions such as tax havens.
''The era of banking secrecy is over,'' they said in the joint statement.
As France and Germany demanded, the Organization for Economic Cooperation and
Development published a list of tax haven countries and the G-20 leaders took
note of it.
France and Germany also backed the launch of a new Financial Stability Board
with a strengthened mandate, which succeeds the Financial Stability Forum,
whose membership covers all the G-20 economies. The FSB groups financial
authorities of each economy and assesses vulnerabilities affecting the
financial system.
Together with the IMF, the FSB is expected to issue early warnings to identify
financial risks.
The G-20 leaders also renewed their opposition to rising protectionism around
the world, extending their pledge that they will refrain from raising new
barriers to investment and trade in goods and services to the end of 2010.
The G-20 said they will meet again before the end of this year to review
progress on their commitments.
Brown said the venue of the next summit will be announced in a few days, but
Aso said the next summit will be held in New York on the sidelines of a U.N.
General Assembly meeting in the fall.
The G-20 consists of the Group of Seven major industrialized countries --
Britain, Canada, France, Germany, Italy, Japan and the United States -- plus
Argentina, Australia, Brazil, China, India, Indonesia, South Korea, Mexico,
Russia, Saudi Arabia, South Africa, Turkey and the European Union.
==Kyodo
2009-04-03 21:03:00