“Growth is now under way. However, we still face significant challenges ahead.”
The joint statement issued at the end of the G20 finance ministers’ meeting said that fiscal and monetary policy will stay “expansionary” for as long as needed to reduce the chances of a double-dip recession.
Action over bonuses
On the issue of bank remuneration, the communique called for “global standards on pay structure … to ensure compensation practices are aligned with long-term value creation and financial stability”.
The statement fell short of calling for caps on bonuses, saying: “We also ask the Financial Stability Board to explore possible approaches for limiting total variable remuneration in relation to risk and long-term performance.”
The board has been asked to present its proposals to the full G20 meeting in the US later this month.
The position was seemingly a compromise between countries including France and Germany that had pushed hard for pay limits and Britain, the US and Canada, which were opposed to caps.
|G20 finance ministers met at the Queen Elizabeth II centre in London [AFP]|
Tim Friend, Al Jazeera’s correspondent in London, said: “What G20 leaders are getting to is a situation where they would link bonuses to performances.
“Banks would have to show that the capital available to pay for those bonuses was proportionately in place.”
Alastair Darling, the UK finance minister, said: “We are determined to take action to stop banks or other financial institutions getting themselves into a situation where their pay and reward practices actually encourage people to take risks.
“[This] brings their institutions into a situation where they could be brought down with catastrophic results.
“I hope we are going to enter an era where we do not have again a situation where people are being rewarded for reckless behaviour,” he said.
The finance ministers agreed they would keep spending the $5 trillion already earmarked as economic stimulus and delay any unwinding of emergency fiscal and monetary measures until economies are sturdy enough to stand on their own.
“We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies, consistent with price stability and long-term fiscal sustainability until recovery is secured,” the statement said.
“We agreed need for a transparent and credible process for withdrawing our extraordinary fiscal, monetary and financial sector support as recovery becomes firmly secured,” it said.
“Working with the IMF [International Monetary Fund] and the FSB [Financial Stability Board] we will develop co-operative and coordinated exit strategies, recognising that the scale, timing and sequencing of actions will vary across countries and across the types of policy measures.”
Bank pay packages
Some G20 sources expressed frustration that there was not more progress made in curbing excessive pay packages for bankers – particularly those employed by firms that have received billions of dollars in government support.
Dominique Strauss-Kahn, the IMF chief, said: “There is broad agreement on what to do. The problem is we need to go beyond agreement. We need to have concrete measures.
“I’m impressed by the level of consensus, but I’m still waiting for strong measures to be decided and also to be implemented at the national level.”
Much of the public pressure before the meeting had centred on bank remuneration.
John Hilary, the executive director of the campaigning charity War on Want, told Al Jazeera: “The G20 have failed to recognise the serious impact of this economic meltdown around the world.
“Tens of millions of people are being pushed into extreme poverty in the poorest countries and yet, what are they talking about? How rich our bankers should be. It just doesn’t square up.”