LONDON: The leaders of the world’s biggest economies hope to restore global growth by the end of 2010, the Financial Times reported on Sunday, quoting a draft communique for a summit this week. US President Barack Obama told the newspaper he saw signs that the slump was stabilising.
Stimulus measures already taken would raise global output by more than two percentage points and create more than 20 million jobs worldwide, the FT said, quoting from the draft ahead of the summit of G20 leaders in London on Thursday.
As well as higher spending, leaders are pinning their hopes on measures to save their banks and more money for the International Monetary Fund to stem the worst global economic crisis since the 1930s.
The G20 leaders will discuss ways of fighting the crisis, including new, tighter rules for financial institutions aimed at preventing a repeat of the credit crisis and help for international trade.
The draft appears to contain no specific numbers on further government stimulus measures aimed at boosting demand, an area of disagreement between Washington and some European countries which have favoured more emphasis on regulatory reform.
The United States has pressed for more effort from other countries but mainland Europe says it has done enough for now.
Obama told the FT in an interview that G20 countries would agree to “do what is necessary to promote trade and growth” and he played down talk of a transatlantic rift.
“The most important task for all of us is to deliver a strong message of unity in the face of the crisis,” Obama told the newspaper in the interview published on the FT’s website.
The president said he saw “glimmers of stabilisation” including signs that the US housing market – the source of the global slump – was stabilising.
With governments around the world setting aside trillions of dollars to save their banks and boost their economies, Obama conceded that public opinion in the United States and elsewhere might make it hard to come up with further measures. But it was also important “that we are prepared to step into the breach should current efforts prove to be inadequate.”
The 24-point draft in the FT set out action to be taken on hedge funds, bankers’ pay, tax havens, currency valuation and banks’ capital reserves.
“We are determined to restore growth now, resist protectionism, and reform our markets and institutions for the future,” the draft communique said, according to the FT. “We are determined to ensure that this crisis is not repeated.”
It called for the completion of the Doha round of trade talks, saying it could boost the global economy by around US$150bil annually. Members would refrain from competitive currency devaluation, it added.
It stressed the importance of helping emerging economies and set out plans to boost the IMF’s firepower with more contributions from members and more borrowing in the market.
The G20 has been expected to at least double funds available to the IMF from the current US$250bil. — Reuters
G20 leaders were expected to discuss using proceeds from planned IMF gold sales to double funding available for poor countries, a source familiar with the plan said on Sunday.
The fund is trying to raise about US$2bil and is separate from the main IMF arsenal.
Hedge funds will be overseen by a stronger Financial Stability Forum (FSF), expanded to include all G20 states and renamed the Financial Stability Board.
Tax havens would be named at the summit and they would be subject to unspecified sanctions, the draft said.
The draft also signalled that G20 should coordinate any moves away from historically low interest rates.
They were committed to “put in place exit strategies from the necessary expansionary policies, working together to avoid unintended impacts on other,” the draft said. — Reuters
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