Global leaders pledged an additional $1 trillion to restore credit, growth and jobs in the world economy on Thursday, exceeding expectations in their plan to deal with the financial crisis. The huge program of new spending by the Group of 20 nations will take their combined outlay in the crisis to $5 trillion by the end of the next year. The G20 communique said that the measures will raise world output by 4 percent by the end of next year. The leaders agreed to renounce protectionism, moved to name and shame tax havens, and tighten rules on hedge funds and credit rating agencies, aiming to ward off future crises. The G20 also agreed to create a financial stability board to provide early warning of systemic economic risks. US President Barack Obama declared the summit as “historic” and a “turning point” for the world. “We have agreed on a series of unprecedented steps to restore growth and prevent a crisis like this from happening again,” said Obama The $1 trillion will be available to the world economy through the International Monetary Fund and other institutions. This included $250 billion of IMF reserve units called Special Drawing Rights. The agreements include a promise to triple the resources of the International Monetary Fund to $750 billion, with $40 billion coming from China – a significant step for the world's third-largest economy. The leaders also pledged $250 billion in trade finance over the next two years – a key measure to help struggling developing countries, whom they promised to give a greater say in world economic affairs. Other main points in the agreements are: u New rules on pay and bonuses for corporate chiefs u IMF will sell billions of dollars of gold reserves to help poor countries u Agreement to ‘act urgently' to conclude WTO's Doha round u G20 leaders will meet again this year “This is the day that the world came together, to fight back against the global recession. Not with words but a plan for global recovery and for reform and with a clear timetable,” British Prime Minister Gordon Brown, the summit host, said. Addressing a key demand from France and Germany, Brown said the leaders agreed “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.” French President Nicolas Sarkozy said the results were beyond what could have been imagined. German Chancellor Angela Merkel hailed the G20 summit's accord on Thursday to fix the ailing global economy as a “historic compromise in extraordinary crisis.” Some economists said the new IMF funds masked the fact that there was no agreement for more fiscal stimulus actions by individual countries, something the United States, UK and Japan wanted but France and Germany strongly resisted. Brown said that while there were “no quick fixes”, the decisions meant that “we can shorten the recession and we can save jobs.” “For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world's poorest,” Brown said. “This is a collective action of people around the world working at their best.” Obama also cautioned that the G20 agreements were only a beginning that hold promise. “In life, there are no guarantees, and in economics, there are no guarantees,” he warned, when asked how quickly the large-scale reforms would rescue the crippled world economy.
