World leaders agree to act fast against recession

By David Lawder and Emmanuel Jarry

WASHINGTON (Reuters) - World leaders on Saturday backed a rapid action plan for the global economic crisis, agreeing on the need for measures to spur growth, better financial market rules and more say for emerging countries.

"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems," the leaders of more than 20 industrialized and developing nations said after a summit.

Government spending plans to boost growth are needed with "rapid effect", but they did not commit to a coordinated push, and differences were apparent over how to regulate the financial industry, in areas including hedge funds.

In one historic breakthrough, they agreed emerging market countries should have a voice in running the world economy. They will study ways of giving them more power at the International Monetary Fund.

Presidents and prime ministers from the powers of the 20th century for the first time in a G20 summit joined the leaders of new economic heavyweights such as export colossus China and oil-rich Saudi Arabia. They met in a Washington museum around a large map of the world, trying to highlight the global nature of their rescue plan.

U.S. President George W. Bush hailed the meeting he hosted as a success, saying leaders agreed to pro-growth policies.

"It makes sense to come out of here with a firm action plan, which we have, and it also makes sense to say to people that there is more work to be done, and there will be more meetings," Bush told reporters.

Signs are mounting of a painful economic slump in many regions, with the euro zone slipping into recession according to data last week, unemployment climbing in the United States and elsewhere and emerging economies slowing.

As the summit began, the International Monetary Fund agreed to a loan worth at least $7.6 billion as part of a bigger plan for Pakistan where foreign currency reserves have dwindled and the risk of a default on its debts has grown.

In another sign of the scope of the crisis, India on Saturday took the latest in a series of steps to improve money market liquidity and help exporters.

The G20 group of advanced and big developing economies also agreed on Saturday there should be no rise in protectionism in the face of the economic slump.

Bush and several other leaders said they would aim for a long-elusive breakthrough in the struggling Doha round of talks for a global trade deal before the end of the year.

BROADER RESPONSE NEEDED

With Bush only two months away from leaving the White House and his successor Barack Obama choosing to stay away from the Washington meeting, talk of the summit launching a top-to-bottom overhaul of global finance had been tempered.

In their summit communique, the leaders said the worsening economy meant "a broader policy response is needed, based on closer macroeconomic cooperation," and they backed fiscal measures to boost growth without risking budget discipline.