G20 nations pledge financial fix

Finance ministers vow to end economic downturn by "any means necessary".

    Darling, left, and Geithner agreed on a co-ordinated response, but gave few details [AFP]

    They said central banks will maintain expansionary policies as long as is needed and that governments' fiscal commitments already pledged should be implemented without delay.

    Capital increases

    They also said banks should have "all the capital they need", starting with a "substantial" capital increase for the Asian Development Bank.

    Areas of financial markets that had previously been subject to relatively light regulation will now be subject to the "appropriate degree of regulation and oversight ... to prevent the build-up of systemic risk", the G20 said.

    Finance ministers were meeting ahead of a G20 leaders' meeting in London on April 2.

    Alastair Darling, the UK's finance secretary, said the G20 had a "clear sense of direction", and Timothy Geithner, the US treasury secretary, said that the US' recovery "will be stronger if the world is stronger".

    "We have a strong consensus on both the need for recovery and for reform. Reforms so we never again face a crisis of this magnitude"

    Timothy Geithner,
    US treasury secretary

    "This is a global crisis and it requires a global co-ordinated response. We have a strong consensus on both the need for recovery and for reform. Reforms so we never again face a crisis of this magnitude," Geithner said.

    Stephen Barber, a political economist at the Global Policy Institute, told Al Jazeera that G20 finance ministers concentrated on regulation of the financial system, because that was the only place they could get agreement "in principle".

    "The substantive reason for this sort of meeting - that we're in a global economic recession that requires some sort of concerted effort among these nations - clearly they could not get agreement on that."

    Youssef Boutros Ghali, the Egyptian finance minister, told Al Jazeera that key issues were in the pipeline, but more pressing issues were currently on the table.

    "Whenever finance ministers of systemically important countries get together, you achieve something. Especially in this period, where we have a problem, the extent of which is not entirely defined.

    "The more we talk to each other, the better grasp of the problem we have ... Any country that goes on its own, will lose."

    Taxation cut

    Before the meeting, Washington called for increased spending and tax cuts to give the economy a jumpstart.

    But Germany and France, which are wary of mounting debts, said that current efforts to fix the situation need to be re-evaluated and the focus placed on regulatory reform.

    Japan and China joined the debate on Friday, saying that government spending should be the priority.

    The Group of Twenty

      G20 was established in 1999 as a forum for industrialised and developing economies to discuss global economy issues

     It groups Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union

    The International Monetary Fund (IMF) and the World Bank also participate in meetings

    Together, member countries represent around 90 per cent of global gross national product, 80 per cent of world trade and two-thirds of the world's population

    Gordon Brown, the UK prime minister, said that the April summit would take the economic agenda forward and seek agreement on reshaping the international regulatory system.

    "It's going to include tax and regulatory havens where it didn't before. The scope of action is defined by what a company or an institution does, not what it says it does," he said.

    "Regulation in one country must co-operate more closely with regulation in another.

    "We must bring the shadow banking systems, and this includes hedge funds, into the regulatory system."

    Al Jazeera's Tim Friend, reporting from Horsham, said: "There remains a considerable point of difference between Washington and Europe about exactly how and what the tactics should be towards getting the economy back on track."

    Officials from the emerging powers of Brazil, Russia, India and China said on Saturday that protectionism was "an increasingly real threat" and that not enough funds were available to help troubled nations.

    "IMF [the International Monetary Fund] resources are clearly inadequate and should be very significantly increased," they said in a statement.

    "We deem it necessary to develop new credit facilities that could assist countries facing financial problems."

    India and China

    Samah el-Shahat, Al Jazeera's economic analyst, said that India and China needed to have a greater say in international institutions such as the IMF.

    "It could be the only way they can protect their own industries," she said.

    "America and Europe have long resisted giving any of these countries greater say or greater quotas."

    Following the meeting on Saturday, one delegate suggested ministers discussed a "doubling" of IMF resources to about $520 billion, though that figure could not be verified.

    SOURCE: Al Jazeera and agencies


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