Further action needed on financial crisis: G20 (Lead)

November 10th, 2008 - 1:52 pm ICT by IANS  

Sao Paulo, Nov 10 (DPA) Finance ministers of the Group of 20 industrialised and emerging economies (G20) have agreed that global stability and growth must be the cornerstones of any plan to bring volatile markets under control and fight off worldwide recession.While emerging economies demanded a greater voice in any new regulations or systems that may emerge from the emergency finance summit planned for Saturday in Washington, the European Union had a different opinion.

According to a report in the newspaper O Globo, European Union (EU) leaders, after a day of meeting behind closed doors in Brazil’s commercial capital, agreed that gaining greater influence requires providing more resources to solve problems.

“In the opinion of the EU, whoever wants more say must also bring a larger financial offering to the table. There are no free rides,” German Finance Secretary Joerg Asmussen was quoted as saying.

The G20 talks in Brazil included finance ministers and central bank chiefs, who met to lay the basis for the summit of G20 leaders in Washington.

In a final statement on Sunday, the Group of 20 said it was prepared to act “urgently” to bolster growth and called on governments to cut interest rates and raise spending.

“We stand ready to urgently take forward work and actions agreed by our leaders to restore and maintain financial stability and support global growth,” the group said. “Countries must use all their policy flexibility, consistent with their circumstances, to support sustainable growth.”

The measures should include “monetary and fiscal policy,” the statement said, according to the Bloomberg financial news service.

“The solution to this crisis must be rapid,” Brazilian Finance Minister Guido Mantega told reporters. “We need to change the tire on the car while it’s still moving.”

Brazil, Russia, India and China plan coordinated measures to increase trade and capital flows among their economies, Russian Finance Minister Alexei Kudrin told Bloomberg.

Mexican Deputy Finance Minister Alejandro Werner said that slower economic growth and lower food and commodity prices justify cutting interest rates.

Mantega warned that emerging economies are tired of appearing at meetings with industrialized countries only to be allowed to “drink coffee.” In the future, it will be increasingly difficult for industrialized countries to exclude emerging and developing economies from a meaningful participation in international decisions, he said.

French Finance Minister Christine Lagarde emphasized that the G20 agreed that an expansive monetary and investment programme were necessary to finding the way out of the financial crisis. World credit markets have cramped up in the wake of a soured US mortgage market.

“The most important thing is that we formulate from anew the rules governing international finance,” Lagarde said.

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