G20 agrees to trillion-dollar deal to fight world eonomic crisis
By staff writers
April 03, 2009 04:23am
British Prime Minister Gordon Brown talks following the G20 summit in London / AFP
G20 leaders agree to raft of measures
$7 trillion to be spent fixing economy
Ordered a crackdown on tax havens
WORLD leaders have agreed to inject hundreds of billions of dollars into the IMF and trade finance, ordered a crackdown on tax havens and pledged to spend $US5 trillion ($7.17 trillion) on the global economy by the end of next year, British Prime Minister Gordon Brown says.
Outlining the conclusions of the G20 summit, Mr Brown announced an additional $500 billion for the IMF, plus $250 billion in IMF Special Drawing Rights and $250 billion to boost trade.
The Group of 20 has also ordered the IMF to sell billions of dollars of gold reserves to help the world's poor countries, and agreed on new rules on pay and bonuses for corporate chiefs, Mr Brown said after the one-day summit in London.
Mr Brown said the International Monetary Fund and World Bank would undergo major reforms to reflect changes in the power structure of the world economy.
"A new world order," he said.
The IMF's resources are to be tripled to about $US750 billion ($1.08 trillion) to help nations through the crisis, Brown said.
Crackdown on 'cowboys'
Prime Minister Kevin Rudd said the financial market "cowboys" who wreaked havoc on the world economy will be brought undone by the deal.
Mr Rudd says the agreement would benefit tradies, young people and small business with real commitments against real timelines.
"Today's agreement begins to crack down on the sort of cowboys in global financial markets that have brough global markets undone with real impacts for jobs everywhere," Mr Rudd said.
It was a concrete plan to reduce, but not eliminate, the effects of the global recession set off by the collapse of banks and financial markets in US last year.
"It's been prime ministers and presidents who have struck this deal but it's small businesses, tradies and young people who will benefit from it over time because global action is necessary to support local jobs," Mr Rudd said.
French President Nicolas Sarkozy, who had threatened to walk out of the summit, said the result of the meeting was beyond his expectations.
"The G20 countries have decided on a profound reform of the international financial architecture, which has not been done to such an extent since the Bretton Woods accords in 1945," he said.
The agreement represented "a commitment by heads of state and government to strengthen regulation and supervision of financial activities. That was a priority for Germany and France.
"This priority has been taken up as one of the aims of the heads of state and government," he added, speaking after the recovery plan was announced by British Prime Minister Gordon Brown.
"It is now on record that a breakdown in regulation was at the origin of the financial crisis."
Russian President Dmitry Medvedev hailed a G20 accord on how to fix the global economy as a "step forward", but cautioned that it would not solve everything.
"This is a step forward, this is a step in the right direction. Of course we could not solve all the issues, but such a goal wasn't on the agenda," he said.
World stocks shot up amid greater optimism. On Wall Street, the Dow Jones Industrial Average rose 3.45 per cent and the tech-heavy Nasdaq index was up 3.83 per cent.
London's FTSE 100 index of leading shares closed up 4.28 per cent, Paris soared 5.37 per cent and Frankfurt rocketed up 6.07 per cent.
Hong Kong led the charge in Asia, shooting up 7.41 per cent, while Tokyo closed up 4.40 per cent at a three-month high and Mumbai gained 4.51 per cent.
The key measures
* Extra $US1 trillion ($1.43 trillion) for international bodies, including trebling of International Monetary Fund financing to $US750 billion ($1.08 trillion)
* G20 nations expect to have spent $US5 trillion ($7.17 trillion) battling the economic crisis by the end of 2010
* Extra $US250 billion ($358.6 billion) for trade finance
* Agreement to shame and name blacklisted tax havens
* New rules on pay and bonuses for corporate chiefs
* IMF will sell billions of dollars of gold reserves to help poor countries
* Agreement to 'act urgently' to conclude WTO's Doha round
* G20 leaders will meet again this year