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From: tassos antiochos <aantiochos@gmail.com>
Date: Fri, 3 Apr 2009 23:55:44 +0300
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Global plan for recovery and reform (02/04/2009) Download pdf file

The official communique issued at the close of the G20 London Summit.

Read the statement

1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

2. We face the greatest challenge to the world economy in modern
times; a crisis which has deepened since we last met, which affects
the lives of women, men, and children in every country, and which all
countries must join together to resolve. A global crisis requires a
global solution.

3. We start from the belief that prosperity is indivisible; that
growth, to be sustained, has to be shared; and that our global plan
for recovery must have at its heart the needs and jobs of hard-working
families, not just in developed countries but in emerging markets and
the poorest countries of the world too; and must reflect the
interests, not just of today's population, but of future generations
too. We believe that the only sure foundation for sustainable
globalisation and rising prosperity for all is an open world economy
based on market principles, effective regulation, and strong global
institutions.

4. We have today therefore pledged to do whatever is necessary to:

restore confidence, growth, and jobs;
repair the financial system to restore lending;
strengthen financial regulation to rebuild trust;
fund and reform our international financial institutions to overcome
this crisis and prevent future ones;
promote global trade and investment and reject protectionism, to
underpin prosperity; and
build an inclusive, green, and sustainable recovery.
By acting together to fulfil these pledges we will bring the world
economy out of recession and prevent a crisis like this from recurring
in the future.

5. The agreements we have reached today, to treble resources available
to the IMF to $750 billion, to support a new SDR allocation of $250
billion, to support at least $100 billion of additional lending by the
MDBs, to ensure $250 billion of support for trade finance, and to use
the additional resources from agreed IMF gold sales for concessional
finance for the poorest countries, constitute an additional $1.1
trillion programme of support to restore credit, growth and jobs in
the world economy. Together with the measures we have each taken
nationally, this constitutes a global plan for recovery on an
unprecedented scale.

Restoring growth and jobs

6. We are undertaking an unprecedented and concerted fiscal expansion,
which will save or create millions of jobs which would otherwise have
been destroyed, and that will, by the end of next year, amount to $5
trillion, raise output by 4 per cent, and accelerate the transition to
a green economy. We are committed to deliver the scale of sustained
fiscal effort necessary to restore growth.

7. Our central banks have also taken exceptional action. Interest
rates have been cut aggressively in most countries, and our central
banks have pledged to maintain expansionary policies for as long as
needed and to use the full range of monetary policy instruments,
including unconventional instruments, consistent with price stability.

8. Our actions to restore growth cannot be effective until we restore
domestic lending and international capital flows. We have provided
significant and comprehensive support to our banking systems to
provide liquidity, recapitalise financial institutions, and address
decisively the problem of impaired assets. We are committed to take
all necessary actions to restore the normal flow of credit through the
financial system and ensure the soundness of systemically important
institutions, implementing our policies in line with the agreed G20
framework for restoring lending and repairing the financial sector.

9. Taken together, these actions will constitute the largest fiscal
and monetary stimulus and the most comprehensive support programme for
the financial sector in modern times. Acting together strengthens the
impact and the exceptional policy actions announced so far must be
implemented without delay. Today, we have further agreed over $1
trillion of additional resources for the world economy through our
international financial institutions and trade finance.

10. Last month the IMF estimated that world growth in real terms would
resume and rise to over 2 percent by the end of 2010. We are confident
that the actions we have agreed today, and our unshakeable commitment
to work together to restore growth and jobs, while preserving
long-term fiscal sustainability, will accelerate the return to trend
growth. We commit today to taking whatever action is necessary to
secure that outcome, and we call on the IMF to assess regularly the
actions taken and the global actions required.

11. We are resolved to ensure long-term fiscal sustainability and
price stability and will put in place credible exit strategies from
the measures that need to be taken now to support the financial sector
and restore global demand. We are convinced that by implementing our
agreed policies we will limit the longer-term costs to our economies,
thereby reducing the scale of the fiscal consolidation necessary over
the longer term.

12. We will conduct all our economic policies cooperatively and
responsibly with regard to the impact on other countries and will
refrain from competitive devaluation of our currencies and promote a
stable and well-functioning international monetary system. We will
support, now and in the future, to candid, even-handed, and
independent IMF surveillance of our economies and financial sectors,
of the impact of our policies on others, and of risks facing the
global economy.

Strengthening financial supervision and regulation

13. Major failures in the financial sector and in financial regulation
and supervision were fundamental causes of the crisis. Confidence
will not be restored until we rebuild trust in our financial system.
We will take action to build a stronger, more globally consistent,
supervisory and regulatory framework for the future financial sector,
which will support sustainable global growth and serve the needs of
business and citizens.

14. We each agree to ensure our domestic regulatory systems are
strong. But we also agree to establish the much greater consistency
and systematic cooperation between countries, and the framework of
internationally agreed high standards, that a global financial system
requires. Strengthened regulation and supervision must promote
propriety, integrity and transparency; guard against risk across the
financial system; dampen rather than amplify the financial and
economic cycle; reduce reliance on inappropriately risky sources of
financing; and discourage excessive risk-taking. Regulators and
supervisors must protect consumers and investors, support market
discipline, avoid adverse impacts on other countries, reduce the scope
for regulatory arbitrage, support competition and dynamism, and keep
pace with innovation in the marketplace.

15. To this end we are implementing the Action Plan agreed at our last
meeting, as set out in the attached progress report. We have today
also issued a Declaration, Strengthening the Financial System. In
particular we agree:

to establish a new Financial Stability Board (FSB) with a strengthened
mandate, as a successor to the Financial Stability Forum (FSF),
including all G20 countries, FSF members, Spain, and the European
Commission;
that the FSB should collaborate with the IMF to provide early warning
of macroeconomic and financial risks and the actions needed to address
them;
to reshape our regulatory systems so that our authorities are able to
identify and take account of macro-prudential risks;
to extend regulation and oversight to all systemically important
financial institutions, instruments and markets. This will include,
for the first time, systemically important hedge funds;
to endorse and implement the FSF's tough new principles on pay and
compensation and to support sustainable compensation schemes and the
corporate social responsibility of all firms;
to take action, once recovery is assured, to improve the quality,
quantity, and international consistency of capital in the banking
system. In future, regulation must prevent excessive leverage and
require buffers of resources to be built up in good times;
to take action against non-cooperative jurisdictions, including tax
havens. We stand ready to deploy sanctions to protect our public
finances and financial systems. The era of banking secrecy is over. We
note that the OECD has today published a list of countries assessed by
the Global Forum against the international standard for exchange of
tax information;
to call on the accounting standard setters to work urgently with
supervisors and regulators to improve standards on valuation and
provisioning and achieve a single set of high-quality global
accounting standards; and
to extend regulatory oversight and registration to Credit Rating
Agencies to ensure they meet the international code of good practice,
particularly to prevent unacceptable conflicts of interest.
16. We instruct our Finance Ministers to complete the implementation
of these decisions in line with the timetable set out in the Action
Plan. We have asked the FSB and the IMF to monitor progress, working
with the Financial Action Taskforce and other relevant bodies, and to
provide a report to the next meeting of our Finance Ministers in
Scotland in November.

Strengthening our global financial institutions

17. Emerging markets and developing countries, which have been the
engine of recent world growth, are also now facing challenges which
are adding to the current downturn in the global economy. It is
imperative for global confidence and economic recovery that capital
continues to flow to them. This will require a substantial
strengthening of the international financial institutions,
particularly the IMF. We have therefore agreed today to make available
an additional $850 billion of resources through the global financial
institutions to support growth in emerging market and developing
countries by helping to finance counter-cyclical spending, bank
recapitalisation, infrastructure, trade finance, balance of payments
support, debt rollover, and social support. To this end:

we have agreed to increase the resources available to the IMF through
immediate financing from members of $250 billion, subsequently
incorporated into an expanded and more flexible New Arrangements to
Borrow, increased by up to $500 billion, and to consider market
borrowing if necessary; and
we support a substantial increase in lending of at least $100 billion
by the Multilateral Development Banks (MDBs), including to low income
countries, and ensure that all MDBs, including have the appropriate
capital.
18. It is essential that these resources can be used effectively and
flexibly to support growth. We welcome in this respect the progress
made by the IMF with its new Flexible Credit Line (FCL) and its
reformed lending and conditionality framework which will enable the
IMF to ensure that its facilities address effectively the underlying
causes of countries' balance of payments financing needs, particularly
the withdrawal of external capital flows to the banking and corporate
sectors. We support Mexico's decision to seek an FCL arrangement.

19. We have agreed to support a general SDR allocation which will
inject $250 billion into the world economy and increase global
liquidity, and urgent ratification of the Fourth Amendment.

20. In order for our financial institutions to help manage the crisis
and prevent future crises we must strengthen their longer term
relevance, effectiveness and legitimacy. So alongside the significant
increase in resources agreed today we are determined to reform and
modernise the international financial institutions to ensure they can
assist members and shareholders effectively in the new challenges they
face. We will reform their mandates, scope and governance to reflect
changes in the world economy and the new challenges of globalisation,
and that emerging and developing economies, including the poorest,
must have greater voice and representation. This must be accompanied
by action to increase the credibility and accountability of the
institutions through better strategic oversight and decision making.
To this end:

we commit to implementing the package of IMF quota and voice reforms
agreed in April 2008 and call on the IMF to complete the next review
of quotas by January 2011;
we agree that, alongside this, consideration should be given to
greater involvement of the Fund's Governors in providing strategic
direction to the IMF and increasing its accountability;
we commit to implementing the World Bank reforms agreed in October
2008. We look forward to further recommendations, at the next
meetings, on voice and representation reforms on an accelerated
timescale, to be agreed by the 2010 Spring Meetings;
we agree that the heads and senior leadership of the international
financial institutions should be appointed through an open,
transparent, and merit-based selection process; and
building on the current reviews of the IMF and World Bank we asked the
Chairman, working with the G20 Finance Ministers, to consult widely in
an inclusive process and report back to the next meeting with
proposals for further reforms to improve the responsiveness and
adaptability of the IFIs.
21. In addition to reforming our international financial institutions
for the new challenges of globalisation we agreed on the desirability
of a new global consensus on the key values and principles that will
promote sustainable economic activity. We support discussion on such
a charter for sustainable economic activity with a view to further
discussion at our next meeting. We take note of the work started in
other fora in this regard and look forward to further discussion of
this charter for sustainable economic activity.

Resisting protectionism and promoting global trade and investment

22. World trade growth has underpinned rising prosperity for half a
century. But it is now falling for the first time in 25 years.
Falling demand is exacerbated by growing protectionist pressures and a
withdrawal of trade credit. Reinvigorating world trade and investment
is essential for restoring global growth. We will not repeat the
historic mistakes of protectionism of previous eras. To this end:

we reaffirm the commitment made in Washington: to refrain from raising
new barriers to investment or to trade in goods and services, imposing
new export restrictions, or implementing World Trade Organisation
(WTO) inconsistent measures to stimulate exports. In addition we will
rectify promptly any such measures. We extend this pledge to the end
of 2010;
we will minimise any negative impact on trade and investment of our
domestic policy actions including fiscal policy and action in support
of the financial sector. We will not retreat into financial
protectionism, particularly measures that constrain worldwide capital
flows, especially to developing countries;
we will notify promptly the WTO of any such measures and we call on
the WTO, together with other international bodies, within their
respective mandates, to monitor and report publicly on our adherence
to these undertakings on a quarterly basis;
we will take, at the same time, whatever steps we can to promote and
facilitate trade and investment; and
we will ensure availability of at least $250 billion over the next two
years to support trade finance through our export credit and
investment agencies and through the MDBs. We also ask our regulators
to make use of available flexibility in capital requirements for trade
finance.
23. We remain committed to reaching an ambitious and balanced
conclusion to the Doha Development Round, which is urgently needed.
This could boost the global economy by at least $150 billion per
annum. To achieve this we are committed to building on the progress
already made, including with regard to modalities.

24. We will give renewed focus and political attention to this
critical issue in the coming period and will use our continuing work
and all international meetings that are relevant to drive progress.

Ensuring a fair and sustainable recovery for all

25. We are determined not only to restore growth but to lay the
foundation for a fair and sustainable world economy. We recognise that
the current crisis has a disproportionate impact on the vulnerable in
the poorest countries and recognise our collective responsibility to
mitigate the social impact of the crisis to minimise long-lasting
damage to global potential. To this end:

we reaffirm our historic commitment to meeting the Millennium
Development Goals and to achieving our respective ODA pledges,
including commitments on Aid for Trade, debt relief, and the
Gleneagles commitments, especially to sub-Saharan Africa;
the actions and decisions we have taken today will provide $50 billion
to support social protection, boost trade and safeguard development in
low income countries, as part of the significant increase in crisis
support for these and other developing countries and emerging markets;
we are making available resources for social protection for the
poorest countries, including through investing in long-term food
security and through voluntary bilateral contributions to the World
Bank's Vulnerability Framework, including the Infrastructure Crisis
Facility, and the Rapid Social Response Fund;
we have committed, consistent with the new income model, that
additional resources from agreed sales of IMF gold will be used,
together with surplus income, to provide $6 billion additional
concessional and flexible finance for the poorest countries over the
next 2 to 3 years. We call on the IMF to come forward with concrete
proposals at the Spring Meetings;
we have agreed to review the flexibility of the Debt Sustainability
Framework and call on the IMF and World Bank to report to the IMFC and
Development Committee at the Annual Meetings; and
we call on the UN, working with other global institutions, to
establish an effective mechanism to monitor the impact of the crisis
on the poorest and most vulnerable.
26. We recognise the human dimension to the crisis. We commit to
support those affected by the crisis by creating employment
opportunities and through income support measures. We will build a
fair and family-friendly labour market for both women and men. We
therefore welcome the reports of the London Jobs Conference and the
Rome Social Summit and the key principles they proposed. We will
support employment by stimulating growth, investing in education and
training, and through active labour market policies, focusing on the
most vulnerable. We call upon the ILO, working with other relevant
organisations, to assess the actions taken and those required for the
future.

27. We agreed to make the best possible use of investment funded by
fiscal stimulus programmes towards the goal of building a resilient,
sustainable, and green recovery. We will make the transition towards
clean, innovative, resource efficient, low carbon technologies and
infrastructure. We encourage the MDBs to contribute fully to the
achievement of this objective. We will identify and work together on
further measures to build sustainable economies.

28. We reaffirm our commitment to address the threat of irreversible
climate change, based on the principle of common but differentiated
responsibilities, and to reach agreement at the UN Climate Change
conference in Copenhagen in December 2009.

Delivering our commitments

29. We have committed ourselves to work together with urgency and
determination to translate these words into action. We agreed to meet
again before the end of this year to review progress on our
commitments.