LONDON (Reuters) - World leaders agreed on Thursday a package worth $250 billion (169.5 billion pounds) in financing to support global trade over the next two years.
The World Bank said it would start its financing of up to $50 billion in May, part of the deal which analysts said was needed quickly to reverse a sharp drop in trade due to the global economic crisis.
“We are going to act decisively to kickstart international trade,” British Prime Minister Gordon Brown told a news conference at the end of the G20 summit of the world’s leading economies. “We will ensure availability of at least $250 billion over the next two years.”
Officials said the sum referred to guarantees that would most probably be issued under trade schemes to importers and exporters rather than the cost to governments of the schemes.
They said the $250 billion would include the $50 billion from the World Bank in its programme which raises funds from international finance and development institutions, governments and banks.
The bank said it would work through global and regional banks to extend trade finance to importers and exporters in developing countries.
Analysts said any increase in trade would depend on how fast the money was made available.
“The key now is implementation. G20 governments must act quickly to provide this finance to companies that need it urgently,” said Eoin O’Malley, senior adviser on international trade at BusinessEurope, Europe’s top business group.
“The measure also needs to be part of wider package to avoid protectionism and conclude the Doha round which will stimulate trade growth. The key point now is to move forward with Doha.”
Carolyn Deere, director of the Global Trade Governance Project at the Global Economic Governance Programme at Oxford University, also said it was a step in the right direction.
“But even on trade finance it’s not really clear — at least they’ve given the figure of two years — who is supposed to be the prime beneficiary,” she said.
An EU diplomat said the G20 countries had also agreed to try to kick start the World Trade Organisation’s long-running Doha round of trade liberalisation talks when the G8 meets emerging and developing countries during a summit in July.
“It is an informal attempt outside the normal WTO process to try and get Doha moving,” a European source with knowledge of the Doha talks told Reuters.
Additional reporting by Darren Ennis in Brussels and Jonathan Lynn in Geneva; writing by Elizabeth Piper; editing by Janet McBride