G20 leaders hope support for banks, higher spending and more money for the IMF will lift the world economy out of recession by the end of 2010, according to a draft G20 communiqué on the Financial Times website on Sunday.
Reuters says stimulus measures already taken will raise global output by more than two percentage points and create more than 20 million jobs worldwide, the FT said, quoting from the leaked draft.
Leaders from the world’s 20 biggest economies meet in the British capital on Thursday to discuss how better regulation, help for international trade and extra spending could help end the worst recession since the 1930s.
The draft appears to contain no specific numbers on further government stimulus measures aimed at boosting demand, an area of disagreement between Washington and some European countries.
The United States has pressed for a bigger effort from other countries but mainland Europe says it has done enough for now.
Spokesmen for Britain’s finance ministry and Prime Minister Gordon Brown refused to comment on the report. Brown’s spokesman dismissed a draft communiqué published in a German magazine on Saturday as out-of-date.
British finance minister Alistair Darling told the BBC that countries would not be asked to reveal their public spending plans at the summit, but they should realise boosting demand will play a key role in any recovery.
“We are not saying that everybody has got to do the same thing, at the same time, on the same day,” he said. “We do need to…make sure we have a commitment for countries to act together, to do what is appropriate in their countries. By acting together in that way, the effect is so much better.”
The credit crisis is still claiming victims in the financial sector.
Spain’s central bank will bail out regional savings bank Caja Castilla la Mancha, the government said on Sunday, as a slumping property market forced the first banking rescue in Spain since the financial crisis began. .
In Britain, Scotland’s biggest building society, Dunfermline, is to be sold after the government refused to rescue the lender .
The 24-point draft in the FT set out action to be taken on hedge funds, bankers’ pay, tax havens, currency valuation and banks’ capital reserves.
“We are determined to restore growth now, resist protectionism, and reform our markets and institutions for the future,” the draft communique said, according to the FT. “We are determined to ensure that this crisis is not repeated.”
It called for the completion of the Doha round of trade talks, saying it could boost the global economy by around $150 billion annually. Members would refrain from competitive currency devaluation, it added.
It stressed the importance of helping emerging and developing economies, saying they faced shocks which threaten stability and could jeopardise the global economy.
It set out plans to boost the International Monetary Fund’s firepower by an unspecified amount by getting higher contributions from members and expanding borrowing in the market. The G20 has been expected to at least double funds available to the IMF from the current $250 billion.
G20 leaders are expected to discuss using proceeds from planned IMF gold sales to double funding available for poor countries, a source familiar with the plan said on Sunday. The fund is trying to raise about $2 billion and is separate from the main IMF arsenal.
Hedge funds will be overseen by a stronger Financial Stability Forum (FSF), expanded to include all G20 states and renamed the Financial Stability Board.
Tax havens will be named in a separate document to be published at the summit and they will be subject to unspecified sanctions, the draft said.
The draft also signalled that G20 members should be ready to coordinate any moves away from historically low interest rates.
They are committed to “put in place exit strategies from the necessary expansionary policies, working together to avoid unintended impacts on other”, the draft said.