PM@ G20->failure of regulatory and supervisory mechanism

 

 

Sharp focus on financial meltdown at G20 meet
PM seeks fiscal package
Washington, PTI:
Warning that the financial meltdown has exploded into a systemic crisis, Prime Minister Manmohan Singh on Saturday asked the world leaders to work on a coordinated fiscal package to tackle recession that is hitting India and other developing countries.
Attributing the crisis to failure of regulatory and supervisory mechanism, Singh said “We must give the world a clear signal to take specific coordinated action to handle the crisis in a manner which restores confidence and which also responds to the needs of the developing countries.” A credible system of multilateral surveillance which can signal the emergence of imbalances, should be designed to protect the world from recurrence of such crisis, Singh said while addressing the G-20 Summit, convened by US President George W Bush.  He also suggested a multi-pronged approach to spur investment, global trade and capital flows to re-instill investors’ confidence. Advocating a coordinated fiscal stimulus to help mitigate severity and duration of the recession, Singh pressed for urgent steps to strengthen the global trading system and forestall any protectionist tendencies which surface during such crisis. Singh, an eminent economist himself, prescribed a slew of measures, including short-term swap arrangements, special incentives to counter shrinkage of capital inflows and activating a process of replenishing IMF resources. “Resorting to fiscal stimulus may be viewed as risky in some situations, but if we are indeed on the brink of the worst downturn since the Great Depression, the risk may be worth taking,” he told the Summit which has leaders from the United Kingdom, France, China, Japan Italy and other leading nations. The Summit deliberated on short-term, medium and long-term steps to overcome the financial crisis. The Prime Minister said industrialised countries could help revive trade flows in developing nations by expanding the scale of export credit finance available to them. What’s on * Leaders from major developed and emerging countries wrap up their G20 summit on Saturday (Sunday Indian time) * They are expected to unveil a plan for repairing the world financial system, ravaged by the credit crisis * On the agenda are: quick action to boost growth * A broad framework for further discussions on market reforms, financial regulation and revamp of the international financial order * The IMF’s role as policeman for financial and economic stability is under review * G20 leaders are likely to meet again in the first three months of 2009 — once Barack Obama takes over as US president * Britain, as next year's G20 chair, may be the host