G20 agreed to make available an additional 850 billion U.S. dollars of resources through the global financial institutions to support growth in emerging and developing countries, according to the G20 leaders' statement issued here on Thursday.
This could help these countries to finance counter-cyclical spending, bank recapitalization, infrastructure, trade finance, balance of payments support, debt rollover, and social support, as they, which have been the engine of recent world growth, are also now facing challenges, said the statement.
In particular, G20 leaders agreed to increase the resources available to the International Monetary Fund (IMF) through immediate financing from members of 250 billion U.S. dollars, subsequently incorporated into an expanded and more flexible New Arrangements to Borrow, increased by up to 500 billion dollars.
They also supported a substantial increase in lending of at least 100 billion U.S. dollars by the Multilateral Development Banks (MDBs), including to low income countries, and ensured that all MDBs have the appropriate capital.
The statement emphasized that it is essential these resources can be used effectively and flexibly to support growth. And G20 leaders welcomed the progress made by the IMF with its new Flexible Credit Line (FCL) and its reformed lending and conditionality framework.
According to the statement, G20 leaders agreed to support a general SDR allocation which will inject 250 billion U.S. dollars into the world economy and increase global liquidity.
In order to help manage the crisis and prevent future crises, G20 leaders hoped to strengthen the longer term relevance, effectiveness and legitimacy of the international financial institutions. They are determined to reform and modernize these institutions to ensure they can assist members and shareholders effectively in the new challenges they face.
They also hoped to reform the mandates, scope and governance of these institutions to reflect changes in the world economy and the new challenges of globalization, while ensuring that emerging and developing economies, including the poorest, must have greater voice and representation.
The statement called on the IMF to complete the next review of quotas by January 2011 and committed to implementing the World Bank reforms agreed in October 2008.
G20 leaders also agreed that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process.