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November 16, 2008

G-20 Summit:
Leaders agree on reform plan to boost growth

World leaders agreed an action plan Saturday to boost flagging global growth and prevent future financial upheaval at a summit here, promising spending plans, a trade deal and reforms, reported AFP.

A final statement from the leaders after one of the biggest international economic gatherings in years pledged responses on a number of fronts, with another meeting scheduled for April to flesh out policies.

Government spending plans are to be used to reverse immediate economic decline, a global trade deal is to be promoted to guard against protectionism, and financial regulation and world financial institutions are to be reformed.

"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems," the G20 said after the crisis summit in Washington.

The meeting of the Group of 20 nations, which represent 85 percent of the world economy, was convened by outgoing US President George W. Bush to tackle the financial crisis that is seen as the worst since the 1930s.

While weeks ago some had talked expansively of redrawing the financial system in a "Bretton Woods II" overhaul in Washington, the final communique amounted to a commitment to keep working on reforms.

The G20 leaders tasked their finance ministers with drawing up a series of recommendations by March 31 to be brought before a new summit in April, most likely in London.

Six areas will be specifically targeted: regulating those parts of the financial markets that have exacerbated the crisis, boosting transparency and reforming "fat cat" compensation practices.

The ministers, from the industrialised and emerging world, must also evaluate global accounting norms and the financing needs of international financial institutions.

Finally, they must draw up a list of financial institutions whose collapse would imperil the global financial system.

Bush said the leaders had agreed that both the International Monetary Fund and World Bank, the two main international financial institutions created in 1944 in Bretton Woods, should be modernised.

The final communique was also significant in what it did not include. There was no mention of the creation of a global financial market enforcer as demanded by emerging countries but opposed by the US.

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