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September 7, 2009

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Pledge to curb bankers' bonuses

TOP finance officials from rich and developing countries have agreed to curb hefty bankers' bonuses, but the proposed crackdown on excessive payouts so far falls short of European demands after the United States and Britain shied away from imposing a cap.

The Group of 20 finance ministers also pledged on Saturday to maintain stimulus measures such as extra government spending and low interest rates to boost the global economy, warning that the fledgling recovery that provided the backdrop to their meeting is by no means assured.

"The financial system is showing signs of repair," said US Treasury Secretary Timothy Geithner. "Growth is now under way. However, we still face significant challenges ahead."

The G-20 joint statement issued at the end of their London meeting said that fiscal and monetary policy will stay "expansionary" for as long as needed to reduce the chances of a double-dip recession.

The International Monetary Fund has said that the global economy is beginning a sluggish recovery from its worst recession since World War II, raising its estimate for global economic growth next year to 2.5 percent, from an April projection of 1.9 percent.

But the IMF also downgraded its forecast for this year, saying it would shrink by 1.4 percent, instead of 1.3 percent.

The group also pushed ahead with plans to reform the financial system, including tougher action against tax havens and giving developing countries a greater say in global governance.

French Finance Minister Christine Lagarde said this ensured that "things will not go back to business as usual ... that there are no dark areas anymore to hide."

But while the gathering - a preparatory session for the G-20 leaders' summit in Pittsburgh later this month - reached agreement on the need for ongoing growth-boosting measures and some regulatory reform, it compromised on the hot topic of bankers' bonuses.


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