G-20 Officials Pledge Greater IMF Funding

Meeting Focuses on Growth, Regulation

Alistair Darling, Britain's finance minister, left, confers with U.S. Treasury Secretary Timothy F. Geithner at the G-20 meeting in Horsham, England. (By Chris Ratcliffe -- Bloomberg News)

Finance officials from 20 of the world's leading economies pledged Saturday to substantially boost funding for the International Monetary Fund and "take whatever action is necessary" to stimulate growth around the world.

The meeting came after days of disagreement between U.S. and European officials about the best approach to tackling the economic problems. The United States has urged countries to enact bigger spending programs to fuel growth, while some European countries have focused on passing new regulations for financial markets.

The Group of 20 finance ministers, whose countries account for 85 percent of the world's economy, said in a joint statement that they have taken decisive action to "boost demand and jobs" and would continue to take action until growth is restored. They said that a "key priority" was to boost lending and that new regulations were needed for hedge funds and other financial institutions in the "shadow banking" system.

Although they agreed on principles and frameworks, the officials said they would leave the precise approaches to individual countries, including how each planned to move toxic assets off bank balance sheets and restore lending.

U.S. Treasury Secretary Timothy F. Geithner said there was broad agreement on the global prescription for the crisis. "You are seeing the world move together at a speed and on a scale without precedent in modern times," he said after the two-day meeting. "We have a strong consensus on the need for both recovery and reform so that we never face a crisis like this again."

German Finance Minister Peter Steinbrueck said the group had "made remarkable progress on regulation and transparency" and had succeeded in taking the "first step to direct regulation of hedge funds."

But, he said, "technical problems remain in dealing with toxic assets; no one has come up with the solution yet."

U.S. officials asked that the IMF's funding be tripled to $750 billion. Although the amount has not yet been worked out, the finance ministers agreed to a "very substantial" increase. Geithner said there was also consensus that "a more fair and balanced governing system" was needed.

Increasing IMF funding is seen as critical to helping the most troubled economies, including those in Eastern Europe.

In exchange for the funding, several countries, including China, are demanding a greater say in the running of the fund. The G-20 ministers agreed Saturday that emerging and developing economies "should have a greater voice" at the IMF and moved forward on a review of its governing structures.

The meeting sets the stage for an April 2 summit in London at which President Obama and other heads of state of the G-20 countries will attend.

Alistair Darling, Britain's chancellor of the exchequer, or finance minister said that he was especially concerned about developing countries and that 90 million people around the world could slip into poverty because of the crisis.