G20 summit fails to support for financial sector: experts

Business Materials 3 April 2009 16:17 (UTC +04:00)

Azerbaijan, Baku, April 3 / Trend , A.Badalova/

Measures to combat consequences of global crisis were announced in the summit of G20 in London. Participants of the summit were fully satisfied with the results. The prior differences were eliminated and leaders of G20 demonstrated willingness to compromise. "G20 summit has surpassed all expectations," French President Nicolas Sarkozy said.

Turkish Prime Minister Recep Tayyip Erdogan said that Turkey welcomes all measures of the summit. "We support the measures of G20 to remove global financial crisis shortly," Erdogan said.

Russian President Dmitry Medvedev said that that summit was a step ahead. However, Medvedev believes that the G20 measures will fail to remove consequences of global financial crisis shortly. "We are patching holes that were made several years ago," Medvedev said.

Experts are not satisfied with the results of the summit.

The London Summit failed to break any new ground on a global fiscal stimulus or support for the financial sector, but it has at least promised generous increases in funding for the IMF and additional trade finance, Chief International EconomistJulian Jessop said.

"There was nothing new of any substance on fiscal policy, just a summary of the measures that have already been announced," he told Trend .

There still does not seem to be much agreement on the best ways to reform the global financial system either.

Some $5bln will be allocated to remove economic problems of G20, out of which $1.1bln will be paid by IMF and other financial institutes.

The London summit called to double IMF's crediting member countries with low income. "Decisions to increase Fund's resources are a powerful signal to the international community's willingness to help poor countries and nations with emerging markets," IMF Managing Director Dominik Stross-Kan said.

Emerging economies will also benefit the most from the increased funding to the IMF, Jessop said.

Member states have agreed to increase funding to the IMF by $500bln, with an additional $100bln for the World Bank. The IMF currently has some $250bln available for lending to countries in financial difficulties, so this new money represents a trebling of its resources. In addition the IMF will simply create another $250bln in Special Drawing Rights - which is its basket currency - effectively adopting a policy of quantitative easing.

Those efforts have been too slow and too timid, Tarleton State University Prof. Boyd Collier said.

"It is necessary to avoid, if not entirely, significant, economic nationalism. The tendency to protect your own economy first is understandable but is counterintuitive with very negative consequences," he added.

A communiqué was adopted as a result of the G20 summit, which consists of six main regulations. Regulations envisage the increase of IMF resources, combat against tax oasis, regulate bonus payments to management of banks and banks, national package of short-term measures, toughen control over financial markets and to ensure national economy stability.

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