G-20 to maintain stimulus measures

       Top finance officials from rich and developing countries have agreed to curb hefty bankers' bonuses,but the proposed crackdown on excessive payouts so far falls short of European demands after the US and Britain shied away from imposing a cap.
       The Group of 20 finance ministers also pledged on Saturday to maintain stimulus measures such as extra government spending and low interest rates to boost the global economy, warning that the fledgling recovery that provided the backdrop to their meeting here is by no means assured."The financial system is showing signs of repair," said US Treasury Secretary Timothy Geithner."Growth is now under way. However,we still face significant challenges ahead."
       The G-20 joint statement issued at the end of their London meeting said that fiscal and monetary policy will stay "expansionary" for as long as needed to reduce the chances of a double-dip recession.
       The International Monetary Fund has said the global economy is beginning a sluggish recovery from its worst recession since World War II, raising its estimate for global economic growth in 2010 to 2.5%, from an April projection of 1.9%.
       But the IMF also downgraded its forecast for this year, saying it would shrink by 1.4%, instead of 1.3%.
       The group also pushed ahead with plans to reform the financial system,including tougher action against tax havens and giving developing countries a greater say in global governance.
       French Finance Minister Christine Lagarde said this ensured "things will not go back to business as usual ... that there are no dark areas anymore to hide."
       But while the gathering - a preparatory session for the G-20 leaders' summit in Pittsburgh later this month - reached agreement on the need for ongoing growth-boosting measures and some regulatory reform, it compromised on the hot topic of bankers' bonuses.
       Curtailing bankers' pay and bonuses has been seen as key by some countries after the risk-promoting payment culture was blamed for fueling the current financial crisis.
       British Treasury chief and meeting host Alistair Darling said that there must be no more cases in which "people are being rewarded for reckless behaviour."
       Heading into the talks in the British capital, European countries had pushed for the G-20, which represents 80% of the world's economic output, to enforce an official cap on both individual payouts and collective bonus pots at financial institutions.
       Britain supported the general effort to reign in bonuses, but not the cap,while the US was more intent on pushing its proposal for a global accord to force banks to hold more capital reserves.
       In the event, the G-20 agreed to give the Financial Stability Board, a body set up at the London Summit of G-20 leaders in April, the task of drawing up practical proposals the Sept 24-25 leaders meeting in Pittsburgh could agree on.
       The G-20 communique failed to directly address a proposal from Mr Geithner for a new international accord to increase bank's capital reserves, but he said he was encouraged by "support around the room."
       Mr Geithner wanted to reach agree-ment on an accord by 2010, with implementation by the end of 2012.
       The communique did not directly address that plan, but called for rapid progress in developing stronger regulation, including a requirement that banks hold more and better capital once recovery is assured.
       Mr Geithner also stressed the need for discussions on a so-called exit strategy to withdraw government support for the economy and pay off trillions of dollars in debt, saying a recovery strategy would not be effective "unless we can make fully credible our commitment to reverse those actions as soon as conditions permit."
       British Prime Minister Gordon Brown won support for his push to take tougher action against tax havens,with the G-20 agreeing to a March 2010 deadline to start sanctions against tax havens which refuse to comply with new transparency rules agreed at the April G-20 leaders' summit in London.