G20 finance ministers look for solutions to crisis

Monday, March 16, 2009

Horsham, Britain - G20 finance ministers and central bank governors have pledged to take further action to find solutions to the current global financial crisis.

The G20 countries agreed on further actions to restore global growth, support lending and strengthen the reform of the global financial system, said a communique issued after the G20 Finance Ministers and Central Bank Governors Meeting ended Saturday afternoon in Horsham, a county in southern England.

The ministers and bank governors hoped the International Monetary Fund (IMF) would assess the actions that were taken and those that were still required.

Meanwhile, they said they had achieved a lot after taking decisive, coordinated and comprehensive actions to boost demand and jobs. They were prepared to take whatever action necessary to restore growth.

They were also committed to fighting all forms of protectionism and maintaining open trade and investment.

The top priority now was to restore lending by tackling problems in the financial system head on, said the communique.

Fiscal expansion provided vital support for growth and jobs, it added.

The participants agreed that efforts should be made to increase the resources of the IMF so as to help the countries hit hard by the financial crisis.

Interest rates have so far been cut aggressively in most of the G20 countries. However, the G20 central bank governors still agreed to maintain expansionary policies as long as needed and use the full range of monetary policy instruments, including the unconventional ones.

All the participants agreed that it was important to strengthen cooperation between the developed countries and developing nations, and the voice and presentation of emerging markets in the international financial system should be raised.

Prior to the publication of the communique by G20 finance ministers and central bank governors, Brazil, Russia, India and China, also named BRIC, issued a statement on the eve of the meeting, saying they would continue to promote domestic demand as necessary.

Meanwhile, they also stressed that the implementation of anti-crisis measures should not hamper their efforts in ensuring mid-term and long-term macro-economic sustainability.

During the meeting, the United States and the European Union tried hard to play down their divergence, mainly on whether to give priority to the economic stimulus plans or to the financial system reforms.

The two sides agreed to further strengthen supervision over the global financial system and improve transparency.

They believed that great attention should also be given to all important financial institutions, markets and instruments.

The G20 accounts for over 80 percent of the world's output, or gross domestic product, which is expected to shrink this year by more than any year since the 1930s after the financial crisis that erupted in the US in 2007 engulfed confidence, activity, trade and jobs worldwide.
After the meeting, South Africa's Finance Minster Trevor Manuel said: "This is positive for the world as a singleness of purpose of what we have to do. It's less about the amount of money pumped into the system - it's a sense of responsibility and collegiality about how you deal with these issues going forward.

"There is concern about the speed of transmission of the financial crisis from the industrialised countries to the entire world. The object of the exercise is to strengthen the IMF and its ability to do more."

Gerard Lyons, chief economist of Standard Chartered Bank, said in a report that more feasible actions were needed to recover the global economy and reform the international financial system.

"The world is watching that whether the London Summit could find a way to pull the global economy out of recession, remove funding difficulties and defeat protectionism," Mr Lyons said.

The gathering was considered as a preparatory meeting for the London Summit, which is to be held in April.

Though a lot of consensuses have been reached at the meeting, no concrete agreements have been signed.

Altogether 21 finance ministers and 18 central bank governors from advanced economies such as the US, Japan, Britain, Germany and France, as well as emerging economies including China, India and South Africa attended the meeting.

Participants also included IMF president Dominique Strauss-Kahn, World Bank chief Robert Zoellick, and Joaquin Almunia, European Commissioner in charge of economic and monetary Affairs.