G20 progress report on key pledges

G20 progress report on key pledges

London: G20 powers have earned a mixed report card on the much-trumpeted goals they agreed at April’s London summit, but divisions still remain ahead of the crunch follow-up in Pittsburgh this week.

Here is a list of the main pledges from the London communique with details of developments since then:

Fiscal expansion

British Prime Minister Gordon Brown said this month that “over half" of the five trillion dollars pledged by 2010 is yet to be spent.

The attention of countries like Japan, France and Germany is now increasingly turning to exit strategies—how to unwind these measures when the time is right economically.

There was broad agreement at a G20 finance ministers’ meeting in London on 5 September that it was too early to withdraw fiscal stimulus amid fears this could undermine recovery. Leaders also agreed any steps had to be coordinated.

Bankers pay and bonuses

This is still a battleground. France wants a mandatory cap while Britain and the US oppose such strong measures. The European Union has called for sanctions against banks that hand out excessive bonuses.

Officials say a compromise is likely. This could take the form of a limit on the total amount banks can pay in bonuses until they build up more capital reserves, for example.

The issue of banks’ capital requirements are likely to be higher up the agenda in Pittsburgh than in London—the US wants them to put more aside so they are better placed to weather bad times.

The international monetary fund

The London meeting pledged to treble resources for the International Monetary Fund (IMF) to $750 billion to help countries hit by the economic crisis.

IMF head Dominique Strauss-Kahn said the extra money had been raised in comments at this month’s finance ministers’ meeting in London.

Officials insist work is continuing on reforming the IMF and other international institutions, but experts question whether major change is possible anytime soon due to the complexity of the reforms and unresolved arguments about giving developing countries a louder voice.

Tax havens

There have been significant steps forward since April, when a “grey list" of countries was published. Liechtenstein and Switzerland are among those which have signed accords to ease their long-held banking secrecy laws.

The Organization for Economic Co-operation and Development (OECD) has long worked to stamp out tax evasion, but its efforts were put in the spotlight by the G20’s calls.

OECD secretary general Angel Gurria said last month there had been “nothing less than a revolution".

World trade and protectionism

The current dispute between the US and China, the world’s two biggest economies, over tariffs imposed on Chinese tyres highlights that protectionism is still an issue, despite warnings from the G20 that free trade is essential to restore growth.

Finance ministers meeting in London to lay the groundwork for the G20 in Pittsburgh drew up new proposals for the conclusion of the long-stalled Doha round of talks that began in 2001 to set up a global free trade pact.