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G20 sets plan for economic recovery

GLOBAL leaders yesterday pledged an additional US$1 trillion to restore credit, growth and jobs in the world economy, announcing a broad raft of measures designed to hasten the end of the global financial crisis.

At a summit of the Group of 20 in London, the leaders also declared a crackdown on tax havens, regulation of hedge funds and a new supervisory body to flag problems in the world financial system.

"Today the largest countries of the world have agreed on a global plan for economic recovery and reform," said the host, British Prime Minister Gordon Brown.

A sweeping G20 communique appeared to bridge the gap between the United States and major European countries over how far to push changes on regulation to curb the market excesses that led to the current crisis.

European and US markets surged yesterday as the outcome of the summit emerged. The index of top European shares was up 5 percent after Japan's Nikkei gained 4.4 percent. On Wall Street, the Nasdaq was up 4 percent and the Dow Jones 3.6 percent. The price of oil jumped above US$52.

Brown said that, while there were "no quick fixes," the decisions meant, "We can shorten the recession and we can save jobs."

The final communique forecast the measures taken would raise world output by 4 percent by the end of next year.

The measures committed US$1 trillion to be available to the world economy through the International Monetary Fund and other institutions, Brown said.

The figure included US$250 billion in IMF reserve units called special drawing rights.

In addition, the IMF would see its own resources tripled, with up to US$500 billion of new funds, of which US$40 billion would come from China.

The G20 asked the IMF to advance sales from its gold reserves, raising funds to help the poorest countries, Brown said.

"For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world's poorest," Brown said.

"This is a collective action of people around the world working at their best."

The G20 leaders also said that developing nations - hard-hit and long complaining of marginalization - will have a greater say in world economic affairs. They said they would renounce protectionism and pledged US$250 billion in trade finance over the next two years - a key measure to help struggling developing countries. The leaders also agreed to new rules on linking executive pay to performance.

The result of the dramatic one-day gathering was swiftly praised by German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Sarkozy praised President Barack Obama and Brown at the end of the meeting, despite having threatened earlier to walk out if unsatisfied with the outcome. The French leader said Obama helped in creating consensus.

Sarkozy said Obama was a "very open man" and "completely in line with what we wanted: that politicians take their responsibilities."


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