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G20 leaders pledge $1.1 trillion to usher in 'new world order'

Europe, Fri, 03 Apr 2009 IANS

London, April 3 (IANS) Leaders of the world's largest economies, including India, Thursday pledged a $1.1 trillion package alongside measures for a tighter regulation of the international financial system to help bring the world out of recession.


The measures were also designed to prevent future shocks.


The leaders at the G20 summit agreed to negotiate a speedy conclusion of the Doha trade round and put some $250 billion more into trade finance - key demands from India, represented by Prime Minister Manmohan Singh.


'We have reached some big, important conclusions,' British Prime Minister and the chair of the summit Gordon Brown said after the leaders concluded their talks behind closed doors at the ExCel Centre on the bank of Thames river in east London, away from the glare of anti-capitalist protesters.


Out of $1.1 trillion pledged for various institutions, $250 billion will be given to the International Monetary Fund (IMF) to lend at cheaper rates to needy countries in the form of special drawing rights (SDRs).


The leaders agreed to another major Indian demand by deciding to sell IMF gold reserves to raise $6 billion that will go toward helping out the world's poorest countries with cheap loans over the next two to three years.


'I think a new world order is emerging and with it the foundations of a new and progressive era of international cooperation,' the host premier declared.


The British prime minister said another $5 trillion will be spent toward a 'concerted fiscal expansion' by member-countries of the G20 that together account for nearly 85 percent of the global output and two-thirds of the population.


The stimulus package will go hand-in-hand with strict regulation of the global financial system, the world leaders agreed after a protracted disagreement between the US and Britain on the one side and France and Germany.


'Major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis,' said the leaders in a communique issued at around 4.30 pm.


The leaders agreed on a new Financial Stability Board comprising all members of the G20 that will provide an early warning system of macro-economic and financial risks.


The G20 leaders also agreed to bring an end to tax havens - jurisdictions that allow people to park their funds, hiding behind strict banking secrecy laws - as also those that have extremely loose regulation for the financial sector.


'Banking secrecy must come to an end,' Brown said at the press conference, adding: 'We stand ready to deploy sanctions to protect our public finances and financial systems.'


'Today's decisions will not immediately solve the crisis, but we have begun the process by which it will be solved.We have resolved that from today we will together manage the process of globalization,' Brown said.


Manmohan Singh later said: 'Given the goodwill and the meeting of minds among leaders, that was possible in London over the last two days, the world has a basis to begin solving the crisis.'


'I leave London satisfied that my bilateral and other meetings have been productive and useful and that the G20 leaders summit has shown a way forward.


'I was happy to note that our views received wide acceptance and support,' the prime minister told reporters, referring to India's demands that were reflected in the communique.


Besides India, Britain and the US, the G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the EU.


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