World leaders gathered at the G20 summit in London have agreed to pump an extra one trillion dollars into the International Monetary Fund (IMF) and other international bodies in a bid to combat the global financial downturn.
As the summit drew to a close, British Prime Minister Gordon Brown said G20 countries expected to spend a total of five trillion dollars by the end of 2010 to salvage the world's economy.
Funding to the IMF will be tripled to 750 billion dollars to give the organisation greater scope in its efforts to bail out struggling economies, the British PM said. This also includes 250 billion dollars of IMF reserve units called Special Drawing Rights (overdraft facilities to help countries in need).
The IMF has also been asked to sell billions of dollars of gold reserves to boost its cash reserves, Brown said.
FRANCE 24’s politics editor Melissa Bell said the massive cash injection will give the IMF greater capacity to deal with the financial crisis.
An additional package of 250 billion dollars has been allocated to revive global trade flows, notably through the World Bank.
Clampdown on tax havens and corporate salaries
Leaders signed off plans to blacklist tax havens and new rules on salaries and bonuses in the corporate sector, a key demand from France and Germany.
"There will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end," Brown said at the closing of the summit. He also said the OECD would draw up a list of tax havens later on Thursday and action would be taken against countries who failed to comply with international rules.
The tax haven issue was one of the sticking points ahead of the summit. France and Germany wanted an immediate crackdown on bank secrecy laws, saying it enabled the rich to dodge taxes at a time of economic hardship. The G20 also discussed tighter market regulations and closer supervision of hedge funds and private equity funds.
French President Nicolas Sarkozy said the achievements of Thursday’s conference went “beyond what we could have hoped for”. Earlier this week, Sarkozy had threatened to walk out of the summit if it failed to yield concrete results. German Chancellor Angela Merkel also hailed the conference as a "historic compromise in an extraordinary crisis".
“Sarkozy and Merkel can walk away from this saying that the Franco-German axis worked well and that they extracted the concessions they were keen on,” says FRANCE 24’s politics editor.
World leaders are due to meet for a second G20 summit in September of this year, French President Nicolas Sarkozy announced.
Stock markets around the world also shot up following the summit’s positive conclusion. On Wall Street, the Dow Jones Industrial Average rose 3.45 percent and the Nasdaq index was up 3.83 percent after the summit’s final statement was announced.
London's FTSE 100 index of leading shares closed up 4.28 percent, Paris soared 5.37 percent and Frankfurt rocketed up 6.07 percent.
Police tightened the security cordon as anti-G20 demonstrators took to the streets of London for a second day. Small pockets of anti-globalisation, anti-war and environmental activists gathered around the summit’s location and in the main financial district.
Thousands of protesters marked ‘Financial Fools’ day’ on Wednesday. One man was killed and at least 86 people were arrested in violent protests after demonstrators gathered around the Bank of England in the heart of London's financial centre.