G20 Finance Ministers Meet: A Summary

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On Saturday, March 14th, finance ministers and banking officials from the Group of 20 (G20) developed and developing economies began a conference at the five-star South Lodge Hotel in West Sussex to discuss the current financial crisis and plans for its resolution. The countries in attendance produce 80% of the world’s economic activity.

The meeting is scheduled to pave the way for the official G20 summit in London on April 2nd and on the agenda are both long-term and short-term measures to deal with the recession. Security around the hotel has been stepped up given the prominence of the officials present, and although Sussex police have heard no official protest reports there are concerns that some may occur.

There are plans to reshape the international financial system, including a proposed doubling of the International Monetary Fund’s lending capacity; all of the G20 nations will contribute their suggestions a to how the reform should look, which given recent speculation of a difference of opinions could prove to be quite heated. The U.S. hopes that the talks will resolve to increase government spending in order to stimulate the economy, whilst the EU primarily would prefer to see extensive regulatory overhaul, rather than enter themselves into more debt for a “sugar high” solution.

Japan supports the U.S. proposal, saying that a cooperative effort on the part of international G20 administrations is a more pressing matter than establishing long-term infrastructure. Though U.K. finance minister Alistair Darling has tried diligently to quell any rumours of a rift between the two schools of thought, it would serve the G20 nations best to put aside any suspected differences, experts say.

A communique issued by the delegation following Friday and Saturday meetings said that a consensus was reached to restore global growth, support lending and reforms to strengthen the global financial system.

With regards to global growth, the members in attendance at the summit said they had taken decisive, coordinated and comprehensive action to boost demand and jobs, and are prepared to take whatever action is necessary until growth is restored. The G20 said that protectionism is not an appropriate policy given the nature of the crisis, and that open trade and international investment are crucial in creating a long-term sustainable financial climate.

The International Monetary Fund (IMF), it was confirmed, will play an important role in helping struggling, developing economies, such as Africa, handle the consequences of global recession. It will do so with the help of stronger bilateral support, an increased lending capability earlier this week rumoured to be around $500 billion. The increased borrowing, it was said, will be subject to more scrutiny and regulation by governments, in hopes of preventing a recurrence of the crash seen in late 2008.

The full G20 summit on April 2nd will finalize details surrounding the proposals put forward by world finance ministers this weekend, and reforms of the World Bank should be in place by that date, the statement issued today disclosed. Hosted by Britain, the April summit follows a G-20 Leaders Summit on Financial Markets and the World Economy, which occured in Washington, D.C., in November of 2008.

The Group of 20 nations is comprised of, in alphabetical order: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the rotating Council Presidency of the European Union. From the 19 nations, finance ministers and central bank governors attend the summit, in addition to high-level representatives of the IMF, World Bank, the International Monetary and Financial Committee, the Development Committee, and the European Central Bank.

An informational agenda issued by the Treasury at the conference this weekend outlined the key objectives of the London summit, regarding the financial crisis:

1. Coordinated macro-economic actions to revive the global economy, stimulate growth and employment – review measures taken and possible further steps
2. Reform and improve financial sector & systems – continue to deliver progress on the Washington Summit action plan
3. Reform international financial institutions (IFIs) – International Monetary Fund (IMF), Financial Stability Forum (FSF) and World Bank

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