Leaders' statement from the G20 summit in London

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Published: 2009/04/02


G20 leaders’ statement

Leaders’ statement from the G20 summit in London


World leaders met on Wednesday and Thursday in London to discuss measures to
tackle the downturn.

The G20 countries are Argentina, Australia, Brazil, Canada, China, France,
Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South
Africa, South Korea, Turkey, the UK, the US and the EU.


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 [IMF special drawing rights]
allocation of $250 billion, to support at least $100 billion of additional
lending by the MDBs [Multilateral Development Banks], 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

· 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

· 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

· 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 [Overseas Development Agencies]
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

· 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 [International Monetary
and Financial Committee] 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

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.

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