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15/03/2009 | G20 Backs Rescue Funds Boost, Renews Crisis Pledges

The Epoch Times Staff

G20 finance ministers Saturday promised the IMF money to help troubled countries and said they would use their full fiscal and monetary firepower to combat the worst economic crisis since the 1930s.

 

"We are committed to deliver the scale of sustained effort necessary to restore growth," the ministers said in a joint G20 statement which also said the IMF and multilateral development banks should be given the funds they need for rescue duties.

Separately, Gordon Brown, who hosts a G20 summit on April 2, said "massive change" was about to take place financial market regulation, notably supervision of hedge funds and other areas only lightly regulated.

The statement issued by the ministers after their talks to prepare that summit said that hedge funds should be registered and disclose information needed to keep tabs on risk.

It said the top priority right now was to get lending, the lifeblood of the economy, flowing normally again.

The ministers essentially papered over differences as to the emphasis and urgency to be given to anti-recession spending by government on the one hand and regulation on the other.

The United States had yet to detail how it plans to clean up banks' toxic assets, which many say is essential to get the world economy moving again.

That shifted much of the focus at this weekend's meeting to renewed commitments to do all that is needed and to pledges that the International Monetary Fund, Asian Development Bank and other agencies will have enough cash to rescue countries in difficulty.

IMF resources should be increased fast and substantially, the Asian Development Bank should get a capital increase and multilateral development banks more generally should get the money they needed to do their job, said the statement.

"We need a commitment from countries that they will do whatever is necessary and as for long as necessary to support their economies," said Alistair Darling, Britain's finance minister, host to the talks at a luxury countryside hotel.

Perhaps mindful of the mass exodus of money that marked the Asian financial crisis of the 1990s, Darling added: "We really must take action to stop damage being done to the emerging economies, who are seeing money coming out of their systems."

The IMF has spent close to $50 billion on bailing out countries in eastern Europe in recent months and is asking for its rescue funding to be doubled to $500 billion, while the Asian Development Bank is also hoping for more ammunition.

The G20 accounts for over 80 percent of the world's output, or gross domestic product, which is expected to shrink in 2009 by more than any year since the 1930s after the financial crisis that erupted in the United States in 2007 engulfed confidence, activity, trade and jobs worldwide.

Banks Key

Officials speaking on condition of anonymity has suggested the meeting would gloss over differences such as just how much governments should spend with a general call upon all to do their utmost to boost their economies.

The United States was demanding earlier this week that other governments commit two percent of GDP to such stimulus, and more than some are currently doing, but that exposed a rift with the likes of Germany and France.

France considers Washington's call a distraction from G20 pledges at a summit last November to combine stimulus with reforms to rein in the excesses of banks and financial markets that led to the current crisis.

World Bank chief Robert Zoellick, also attending the meeting Saturday, said government spending would give the economy no more than a brief "sugar high" if governments failed to rid banks of toxic assets that continue to undermine confidence, trust and the desire to lend or invest.

Along with regulation of hedge funds, France and Germany are seeking tougher control of credit ratings agencies, which stand accused of fuelling the crisis by granting high ratings to many derivatives whose value is now in doubt.

 

The Epoch Times (Estados Unidos)

 


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