G-20 vows to fix economy

Urges boost to IMF lending resources

Finance ministers, central bank governors, and heads of institutions met for the Group of 20 meeting in England. (Andrew Winning/Reuters)

HORSHAM, England - Finance officials from rich and developing countries pledged yesterday to do "whatever is necessary" to fix the global economy, including supervision of freewheeling hedge funds and restoring bank lending by dealing with the shaky securities clogging their finances.

But officials remained cool to a US push for more coordinated government spending to stimulate economies.

They called instead on the International Monetary Fund to assess the individual government actions taken and what more might be required, rather than laying out definite plans to increase spending.

Finance ministers and central bankers from the Group of 20, which accounts for more than 80 percent of the world economy, agreed there was an "urgent need" for a big boost to the lending resources of the International Monetary Fund to help struggling governments in the developing world.

They left the specific amount and who would contribute open, to be taken up at the much-anticipated summit of the group's national leaders in London on April 2. The goal of yesterday's meeting was to shape the agenda for that gathering, which will be closely watched for whether leaders can find common steps to take.

"We're prepared to take whatever action is necessary to ensure growth is restored, and we're committed to do that for however long it takes to do that," said Britain's Treasury chief, Alistair Darling.

As host of the gathering at a hotel south of London, Britain worked hard to bridge divisions between the United States and Europe on the stimulus issue, and all the key players were keen to present a united front yesterday.

US Treasury Secretary Timothy Geithner, who had called on Europe to match Washington's $787 billion package of spending and tax cuts, said there was "broad consensus globally on the need to act aggressively to restore growth to the global economy."

Geithner said he was pleased with progress made at the talks, but noted that the crisis was still playing out.

Darling said that it was for "individual countries to decide what's right for them."

Germany, which has been the most outspoken critic of the US push for more spending, said fixing the financial system has to come first.

"It makes no sense to pump more and more money in our economy when we haven't restored the confidence on the financial market," said Peer Steinbrueck, the German finance minister.

Officials instead put the focus on restoring frozen bank lending through cash infusions and dealing with the shaky assets souring banks' balance sheets. The United States is working on a plan to do that with public and private money, but details have not yet been announced. The G-20 statement also agreed to some oversight on hedge funds, largely unregulated investment funds whose financial clout has grown enormously over the past decade.

The finance ministers also agreed to oversight and registration of credit rating agencies, clearer accounting rules for problem assets, and more standards for credit derivatives.