G20 officials pledge 'whatever action necessary' to revive economy

Finance officials from the world's richest and leading developing countries agreed Saturday to take "whatever action is necessary" to restore global economic growth and support lending.

Canadian Finance Minister Jim Flaherty, right, walks with Mexican Finance Minister Agustin Carstens, front left, in Horsham, England, where they attended Saturday's G-20 meeting.(Kirsty Wigglesworth/Associated Press)

Finance ministers from the Group of 20 nations issued a statement at the end of a meeting in Horsham, England, in which they promised to maintain expansionary monetary policies as long as needed.

They agreed their key priority is to restore bank lending "through continued liquidity support, bank recapitalization and dealing with impaired assets," the G20 statement said.

"We ... are prepared to take whatever action is necessary until growth is restored. We commit to fight all forms of protectionism and maintain open trade and investment," the statement said.

The four major emerging economies — Brazil, Russia, India and China — released their own statement calling for a bigger role in the International Monetary Fund.

G20 officials pledged to boost the role of the IMF, but their statement was short on details of action and did not set targets.

Government tactics vary

The group did not commit to a U.S.-led push for more co-ordinated government spending. The U.S. favours the stimulus package route, while a number of western European countries want to revamp regulations dealing with financial institutions.

Many European countries are balking at loading up on debt, preferring to focus on reform of the international financial architecture.

Reflecting this division, the statement acknowledged the importance of the stimulus efforts already in place and called for stronger financial regulation.

The meeting was seen as laying the groundwork for a major G20 meeting set for London next month. The Group of 20 represent more than 80 per cent of the world economy,

At Horsham, they agreed there was an "urgent need to increase IMF resources very substantially," although they did not commit to a figure, leaving that task to the upcoming summit.

On Friday, China expressed concerns over the security of the U.S. debt it holds and Washington's drive to spend its way out of recession.

"We have lent a huge amount of money to the U.S. Of course, we are concerned about the safety of our assets," Premier Wen Jiabao said.

Beijing, which is hinting at expanding its own stimulus spending, is said to be worried that overspending by Washington could erode the value of the U.S. dollar.

U.S. Treasury spokeswoman Heather Wong countered that concern, saying the U.S. Treasury market "remains the deepest and most liquid market in the world" and that President Barack Obama was committed to restoring growth and fiscal sustainability.

With files from the Associated Press