G20 delivers trillion-$ baby

Will Step Up Funds To IMF, Get Tough On Tax Havens

London: A global boost for the world economy has finally come. And it's worth $1.1 trillion. The G20 summit here on Thursday ended with an agreement to pump mega bucks into the world economy by the end of 2010 through institutions like the IMF. But the booster dose
couldn't hide the fact that some issues have eluded consensus.
    Together with the $1 trillion boost, world leaders have agreed that the age of bank secrecy is over and have pledged to take measures for greater transparency, including in tax havens. The summit agreed to act against tax havens, first by naming those that don't conform to transparency norms and then possibly by imposing sanctions against those that continue to hold out.
    The booster dose, taken together with measures adopted by individual governments, will add up to a fiscal stimulus package of a whopping $5 trillion by the end of 2010. This is expected to help the global economy return to its growth path much earlier than has been predicted so far.
    The $1.1 trillion injection is to consist of an additional $500 billion in the resources of the IMF, a new allocation of special drawing rights (SDRs) worth $250 billion, trade finance support to the tune of $250 billion and another $100 million for lending to the poorest countries by multilateral development banks (MDBs).
    On protectionism, no concrete action has been promised. In fact, there seems to have been little progress on this front. Apart from the trillion-dollar booster dose, the summit agreed to fast-track the proposed reforms of the IMF and World Bank.
    BAILING OUT THE GLOBE
$1tn for international bodies, including additional $500bn in IMF financing and extra $250bn for trade finance G20 expects to spend $5tn battling the crisis by end-2010 Agreement to name and shame protectionist countries New rules on pay and bonuses for corporate chiefs IMF will sell gold reserves worth billions to help poor nations Agreement to "act urgently" to conclude WTO's Doha round G20 leaders to meet again later this year G20: No consensus on key issues
London: The G20 summit has agreed to advance the date by when the IMF's reallocation of quotas among members is to take place to January 2011 and senior staff and heads of these institutions are to be appointed through an open, transparent and merit-based selection process. As of now, the US picks the president of the World Bank while the EU gets its nominee as the managing director of the IMF.
    There was also in the statement an apparent agreement that governments would continue to follow expansionary policies, that shadow banking would need to be regulated and that protectionism must not be resorted to.
    On each of these, which have been sticking points in the G20 process, there was however nothing really concrete emerging from London. The pre-summit insistence by the US that Europe must commit itself to its share of pump priming through fiscal stimulus packages was clearly not acceded to by countries like France and Germany. The summit agreement does not commit them to anything in this direction.
    Similarly, Europe's insistence on greater regulation of the financial sector, perhaps through the institution of a global regulator—a demand which the US had been reluctant to accept—also does not find reflection in the final statement.
    That the G20 constituents have agreed to live to fight another day was reflected also in the decision to have another meeting of the leaders later this year at a date and venue still to be announced.

BUILDING LONDON BRIDGES: PM Manmohan Singh and US President Barack Obama (above) and the PM's wife, Gursharan Kaur, with US First Lady Michelle Obama (right) in London

BREACH OF PROTOCOL: Michelle Obama broke protocol when she placed her arm around Queen Elizabeth II (left) at Buckingham Palace on Wednesday night. The Queen too put her arm round Michelle's waist. An eyewitness quoted in the Daily Mail said, "No one could believe their eyes. In 57 years, the Queen has never been seen to make that kind of gesture and it is certainly against all protocol to touch her. But she didn't seem to mind and was smiling and joking throughout."