London Summit – Leaders’ Statement
2 April 2009
1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.
2. We face the greatest challenge to the world economy in modern times; a crisis
which has deepened since we last met, which affects the lives of women, men,
and children in every country, and which all countries must join together to
resolve. A global crisis requires a global solution.
3. We start from the belief that prosperity is indivisible; that growth, to be sustained,
has to be shared; and that our global plan for recovery must have at its heart the
needs and jobs of hard-working families, not just in developed countries but in
emerging markets and the poorest countries of the world too; and must reflect the
interests, not just of today’s population, but of future generations too. We believe
that the only sure foundation for sustainable globalisation and rising prosperity
for all is an open world economy based on market principles, effective regulation,
and strong global institutions.
4. We have today therefore pledged to do whatever is necessary to:
restore confidence, growth, and jobs;
repair the financial system to restore lending;
strengthen financial regulation to rebuild trust;
fund and reform our international financial institutions to overcome this
crisis and prevent future ones;
promote global trade and investment and reject protectionism, to underpin
prosperity; and
build an inclusive, green, and sustainable recovery.
By acting together to fulfil these pledges we will bring the world economy out of
recession and prevent a crisis like this from recurring in the future.
5. The agreements we have reached today, to treble resources available to the IMF
to $750 billion, to support a new SDR allocation of $250 billion, to support at
least $100 billion of additional lending by the MDBs, to ensure $250 billion of
support for trade finance, and to use the additional resources from agreed IMF
gold sales for concessional finance for the poorest countries, constitute an
additional $1.1 trillion programme of support to restore credit, growth and jobs in
the world economy. Together with the measures we have each taken nationally,
this constitutes a global plan for recovery on an unprecedented scale.
Restoring growth and jobs
6. We are undertaking an unprecedented and concerted fiscal expansion, which will
save or create millions of jobs which would otherwise have been destroyed, and
that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent,
and accelerate the transition to a green economy. We are committed to deliver
the scale of sustained fiscal effort necessary to restore growth.
7. Our central banks have also taken exceptional action. Interest rates have been cut
aggressively in most countries, and our central banks have pledged to maintain
expansionary policies for as long as needed and to use the full range of monetary
policy instruments, including unconventional instruments, consistent with price
stability.
8. Our actions to restore growth cannot be effective until we restore domestic
lending and international capital flows. We have provided significant and
comprehensive support to our banking systems to provide liquidity, recapitalise
financial institutions, and address decisively the problem of impaired assets. We
are committed to take all necessary actions to restore the normal flow of credit
through the financial system and ensure the soundness of systemically important
institutions, implementing our policies in line with the agreed G20 framework for
restoring lending and repairing the financial sector.
9. Taken together, these actions will constitute the largest fiscal and monetary
stimulus and the most comprehensive support programme for the financial sector
in modern times. Acting together strengthens the impact and the exceptional
policy actions announced so far must be implemented without delay. Today, we
have further agreed over $1 trillion of additional resources for the world economy
through our international financial institutions and trade finance.
10. Last month the IMF estimated that world growth in real terms would resume and
rise to over 2 percent by the end of 2010. We are confident that the actions we
have agreed today, and our unshakeable commitment to work together to restore
growth and jobs, while preserving long-term fiscal sustainability, will accelerate
the return to trend growth. We commit today to taking whatever action is
necessary to secure that outcome, and we call on the IMF to assess regularly the
actions taken and the global actions required.
11. We are resolved to ensure long-term fiscal sustainability and price stability and
will put in place credible exit strategies from the measures that need to be taken
now to support the financial sector and restore global demand. We are convinced
that by implementing our agreed policies we will limit the longer-term costs to
our economies, thereby reducing the scale of the fiscal consolidation necessary
over the longer term.
12. We will conduct all our economic policies cooperatively and responsibly with
regard to the impact on other countries and will refrain from competitive
devaluation of our currencies and promote a stable and well-functioning
international monetary system. We will support, now and in the future, to candid,
even-handed, and independent IMF surveillance of our economies and financial
sectors, of the impact of our policies on others, and of risks facing the global
economy.
Strengthening financial supervision and regulation
13. Major failures in the financial sector and in financial regulation and supervision
were fundamental causes of the crisis. Confidence will not be restored until we
rebuild trust in our financial system. We will take action to build a stronger, more
globally consistent, supervisory and regulatory framework for the future financial
sector, which will support sustainable global growth and serve the needs of
business and citizens.
14. We each agree to ensure our domestic regulatory systems are strong. But we also
agree to establish the much greater consistency and systematic cooperation
between countries, and the framework of internationally agreed high standards,
that a global financial system requires. Strengthened regulation and supervision
must promote propriety, integrity and transparency; guard against risk across the
financial system; dampen rather than amplify the financial and economic cycle;
reduce reliance on inappropriately risky sources of financing; and discourage
excessive risk-taking. Regulators and supervisors must protect consumers and
investors, support market discipline, avoid adverse impacts on other countries,
reduce the scope for regulatory arbitrage, support competition and dynamism, and
keep pace with innovation in the marketplace.
15. To this end we are implementing the Action Plan agreed at our last meeting, as set
out in the attached progress report. We have today also issued a Declaration,
Strengthening the Financial System. In particular we agree:
to establish a new Financial Stability Board (FSB) with a strengthened
mandate, as a successor to the Financial Stability Forum (FSF), including
all G20 countries, FSF members, Spain, and the European Commission;
that the FSB should collaborate with the IMF to provide early warning of
macroeconomic and financial risks and the actions needed to address them;
to reshape our regulatory systems so that our authorities are able to
identify and take account of macro-prudential risks;
to extend regulation and oversight to all systemically important financial
institutions, instruments and markets. This will include, for the first time,
systemically important hedge funds;
to endorse and implement the FSF’s tough new principles on pay and
compensation and to support sustainable compensation schemes and the
corporate social responsibility of all firms;
to take action, once recovery is assured, to improve the quality, quantity,
and international consistency of capital in the banking system. In future,
regulation must prevent excessive leverage and require buffers of
resources to be built up in good times;
to take action against non-cooperative jurisdictions, including tax havens.
We stand ready to deploy sanctions to protect our public finances and
financial systems. The era of banking secrecy is over. We note that the
OECD has today published a list of countries assessed by the Global
Forum against the international standard for exchange of tax information;
to call on the accounting standard setters to work urgently with supervisors
and regulators to improve standards on valuation and provisioning and
achieve a single set of high-quality global accounting standards; and
to extend regulatory oversight and registration to Credit Rating Agencies
to ensure they meet the international code of good practice, particularly to
prevent unacceptable conflicts of interest.
16. We instruct our Finance Ministers to complete the implementation of these
decisions in line with the timetable set out in the Action Plan. We have asked the
FSB and the IMF to monitor progress, working with the Financial Action
Taskforce and other relevant bodies, and to provide a report to the next meeting
of our Finance Ministers in Scotland in November.
Strengthening our global financial institutions
17. Emerging markets and developing countries, which have been the engine of
recent world growth, are also now facing challenges which are adding to the
current downturn in the global economy. It is imperative for global confidence
and economic recovery that capital continues to flow to them. This will require a
substantial strengthening of the international financial institutions, particularly the
IMF. We have therefore agreed today to make available an additional $850 billion
of resources through the global financial institutions to support growth in
emerging market and developing countries by helping to finance counter-cyclical
spending, bank recapitalisation, infrastructure, trade finance, balance of payments
support, debt rollover, and social support. To this end:
we have agreed to increase the resources available to the IMF through
immediate financing from members of $250 billion, subsequently
incorporated into an expanded and more flexible New Arrangements to
Borrow, increased by up to $500 billion, and to consider market
borrowing if necessary; and
we support a substantial increase in lending of at least $100 billion by
the Multilateral Development Banks (MDBs), including to low income
countries, and ensure that all MDBs, including have the appropriate
capital.
18. It is essential that these resources can be used effectively and flexibly to support
growth. We welcome in this respect the progress made by the IMF with its new
Flexible Credit Line (FCL) and its reformed lending and conditionality
framework which will enable the IMF to ensure that its facilities address
effectively the underlying causes of countries’ balance of payments financing
needs, particularly the withdrawal of external capital flows to the banking and
corporate sectors. We support Mexico’s decision to seek an FCL arrangement.
19. We have agreed to support a general SDR allocation which will inject $250
billion into the world economy and increase global liquidity, and urgent
ratification of the Fourth Amendment.
20. In order for our financial institutions to help manage the crisis and prevent future
crises we must strengthen their longer term relevance, effectiveness and
legitimacy. So alongside the significant increase in resources agreed today we are
determined to reform and modernise the international financial institutions to
ensure they can assist members and shareholders effectively in the new
challenges they face. We will reform their mandates, scope and governance to
reflect changes in the world economy and the new challenges of globalisation,
and that emerging and developing economies, including the poorest, must have
greater voice and representation. This must be accompanied by action to increase
the credibility and accountability of the institutions through better strategic
oversight and decision making. To this end:
we commit to implementing the package of IMF quota and voice reforms
agreed in April 2008 and call on the IMF to complete the next review of
quotas by January 2011;
we agree that, alongside this, consideration should be given to greater
involvement of the Fund’s Governors in providing strategic direction to
the IMF and increasing its accountability;
we commit to implementing the World Bank reforms agreed in October
2008. We look forward to further recommendations, at the next
meetings, on voice and representation reforms on an accelerated
timescale, to be agreed by the 2010 Spring Meetings;
we agree that the heads and senior leadership of the international
financial institutions should be appointed through an open, transparent,
and merit-based selection process; and
building on the current reviews of the IMF and World Bank we asked the
Chairman, working with the G20 Finance Ministers, to consult widely in
an inclusive process and report back to the next meeting with proposals
for further reforms to improve the responsiveness and adaptability of the
IFIs.
21. In addition to reforming our international financial institutions for the new
challenges of globalisation we agreed on the desirability of a new global
consensus on the key values and principles that will promote sustainable
economic activity. We support discussion on such a charter for sustainable
economic activity with a view to further discussion at our next meeting. We take
note of the work started in other fora in this regard and look forward to further
discussion of this charter for sustainable economic activity.
Resisting protectionism and promoting global trade and investment
22. World trade growth has underpinned rising prosperity for half a century. But it is
now falling for the first time in 25 years. Falling demand is exacerbated by
growing protectionist pressures and a withdrawal of trade credit. Reinvigorating
world trade and investment is essential for restoring global growth. We will not
repeat the historic mistakes of protectionism of previous eras. To this end:
we reaffirm the commitment made in Washington: to refrain from raising
new barriers to investment or to trade in goods and services, imposing new
export restrictions, or implementing World Trade Organisation (WTO)
inconsistent measures to stimulate exports. In addition we will rectify
promptly any such measures. We extend this pledge to the end of 2010;
we will minimise any negative impact on trade and investment of our
domestic policy actions including fiscal policy and action in support of the
financial sector. We will not retreat into financial protectionism,
particularly measures that constrain worldwide capital flows, especially to
developing countries;
we will notify promptly the WTO of any such measures and we call on the
WTO, together with other international bodies, within their respective
mandates, to monitor and report publicly on our adherence to these
undertakings on a quarterly basis;
we will take, at the same time, whatever steps we can to promote and
facilitate trade and investment; and
we will ensure availability of at least $250 billion over the next two years
to support trade finance through our export credit and investment agencies
and through the MDBs. We also ask our regulators to make use of
available flexibility in capital requirements for trade finance.
23. We remain committed to reaching an ambitious and balanced conclusion to the
Doha Development Round, which is urgently needed. This could boost the global
economy by at least $150 billion per annum. To achieve this we are committed to
building on the progress already made, including with regard to modalities.
24. We will give renewed focus and political attention to this critical issue in the
coming period and will use our continuing work and all international meetings
that are relevant to drive progress.
Ensuring a fair and sustainable recovery for all
25. We are determined not only to restore growth but to lay the foundation for a fair
and sustainable world economy. We recognise that the current crisis has a
disproportionate impact on the vulnerable in the poorest countries and recognise
our collective responsibility to mitigate the social impact of the crisis to minimise
long-lasting damage to global potential. To this end:
we reaffirm our historic commitment to meeting the Millennium
Development Goals and to achieving our respective ODA pledges,
including commitments on Aid for Trade, debt relief, and the Gleneagles
commitments, especially to sub-Saharan Africa;
the actions and decisions we have taken today will provide $50 billion to
support social protection, boost trade and safeguard development in low
income countries, as part of the significant increase in crisis support for
these and other developing countries and emerging markets;
we are making available resources for social protection for the poorest
countries, including through investing in long-term food security and
through voluntary bilateral contributions to the World Bank’s
Vulnerability Framework, including the Infrastructure Crisis Facility, and
the Rapid Social Response Fund;
we have committed, consistent with the new income model, that additional
resources from agreed sales of IMF gold will be used, together with
surplus income, to provide $6 billion additional concessional and flexible
finance for the poorest countries over the next 2 to 3 years. We call on the
IMF to come forward with concrete proposals at the Spring Meetings;
we have agreed to review the flexibility of the Debt Sustainability
Framework and call on the IMF and World Bank to report to the IMFC
and Development Committee at the Annual Meetings; and
we call on the UN, working with other global institutions, to establish an
effective mechanism to monitor the impact of the crisis on the poorest and
most vulnerable.
26. We recognise the human dimension to the crisis. We commit to support those
affected by the crisis by creating employment opportunities and through income
support measures. We will build a fair and family-friendly labour market for
both women and men. We therefore welcome the reports of the London Jobs
Conference and the Rome Social Summit and the key principles they proposed.
We will support employment by stimulating growth, investing in education and
training, and through active labour market policies, focusing on the most
vulnerable. We call upon the ILO, working with other relevant organisations, to
assess the actions taken and those required for the future.
27. We agreed to make the best possible use of investment funded by fiscal stimulus
programmes towards the goal of building a resilient, sustainable, and green
recovery. We will make the transition towards clean, innovative, resource
efficient, low carbon technologies and infrastructure. We encourage the MDBs to
contribute fully to the achievement of this objective. We will identify and work
together on further measures to build sustainable economies.
28. We reaffirm our commitment to address the threat of irreversible climate change,
based on the principle of common but differentiated responsibilities, and to reach
agreement at the UN Climate Change conference in Copenhagen in December
2009.
Delivering our commitments
29. We have committed ourselves to work together with urgency and determination
to translate these words into action. We agreed to meet again before the end of
this year to review progress on our commitments.