colavidasi: TOPWRAP 3-Leading economies agree need to boost growth

Brazil - * Brazil calls for overhaul of global finance

* Obama urges Americans to work together on crisis

* IMF chief says G20 is right body to tackle problems

By Todd Benson and Krista Hughes

SAO PAULO (Reuters) - The world's leading economies including China agreed Saturday on the need to take measures to stimulate growth and fight off the threat of a global recession, finance officials said.

Central bank governors and other top government officials from countries representing most of the world's economy hammered out proposals for their leaders to take to an emergency summit on the financial crisis next weekend.

Brazil pressed the case for emerging heavyweights to have a bigger say in global finance.

Brazilian President Luiz Inacio Lula da Silva said the global finance system "collapsed like a house of cards" in the credit crisis due to the "blind faith" of rich countries in self-regulation by markets.

In the United States, President-elect Barack Obama said it was time for Americans to put aside their political differences to focus on averting a deep recession, which he plans to tackle as soon as he moves into the White House in January.

At the annual meeting of the G20 group of the biggest advanced and developing economies in the Brazilian business capital, policy-makers and officials focused on action they could take to stave off the prospect of a global recession.

"I think there is a consensus on the need for coordinated and decisive action globally, going to first of all fiscal policy," Australian Treasurer Wayne Swan told Reuters.

"It's very important that those countries which have the capacity to stimulate their economy do so."

Swan and others said discussions also touched on the need for further monetary loosening in some countries, even after heavy cuts in interest rates by central banks worldwide in recent weeks.

China's central bank governor said the Asian export powerhouse, one of the few remaining engines of global growth, would help stabilize markets by maintaining its economic growth, which he saw at between 8 percent and 9 percent in 2009.

"China is in a very good position to have a strong fiscal expansion. This is something the Chinese authorities talked about," World Bank President Robert Zoellick told reporters.

TIME FOR A PACT ON GLOBAL FINANCE

On Friday, the "BRIC" nations of Brazil, Russia, India and China forged a first joint position calling for reform of institutions like the IMF to give more influence to developing economies that now represent the world's growth engine.

Countries such as export giant China and the oil-rich Gulf states have amassed trillions of dollars in reserves that could help the IMF support smaller countries to withstand the turmoil that has rocked financial markets and their currencies.

Brazil's Lula, a critic of the dominance of the United States and developed economies in the way decisions on global finance are taken, said there was wide acceptance that the elite G7 countries were no longer capable of working alone.

"It is time for a pact between governments to build a new financial architecture for the world," he said.

IMF chief Dominique Strauss-Kahn told reporters that Saturday's discussions showed "the G20 is the right body to try to handle the world's problems."

But the chances look slim of detailed plans emerging soon, not least because the outgoing administration of U.S. President Bush has played down the need for big reforms.

U.S. Treasury Secretary Henry Paulson, like many European finance ministers, did not attend the meetings in Sao Paulo.

'HIT THE GROUND RUNNING'

Obama, speaking in a U.S. radio address, said it was vital that Americans put aside the divisions of the recent election campaign "and that is particularly important at a moment when we face the most serious challenges of our lifetime."

Obama said he would waste no time to fight the crisis.

"While we must recognize that we only have one president at a time and that President Bush is the leader of our government, I want to ensure that we hit the ground running on January 20th because we don't have a moment to lose," he said.

It was not clear whether Obama would attend next weekend's summit of G20 leaders in Washington.

Some European leaders have said the summit offers a chance to lay the groundwork for big changes in the way the global financial system is run at further meetings early next year.

French President Nicolas Sarkozy said Friday that Europe backed ideas such as a stronger role for the IMF, surveillance of credit ratings agencies and caps on excessive risk-taking.

The White House said Saturday it saw common ground with European leaders and agreed on the need to move quickly with some reforms, but it was quiet on specifics.

Saturday, November 8, 2008

TOPWRAP 3-Leading economies agree need to boost growth

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