G20 FINANCE ministers have promised money to rescue troubled emerging market economies and say they will use their full fiscal and monetary firepower to combat the worst downturn since the 1930s.

Ministers from the world’s largest economies, meeting in London at the weekend, also pledged to regulate hedge funds and start closer checks on credit ratings agencies to prevent a repeat of a financial markets crisis that is crippling businesses and putting millions more out of work.

“We are committed to deliver the scale of sustained effort necessary to restore growth,” the ministers said in a statement yesterday promising extra money for the International Monetary Fund (IMF) and regional lenders such as the Asian Development Bank.

No figure was published but one official attending the talks said they centred on more than doubling the $250 billion currently at the IMF’s disposal to help countries hit by a halt to credit and investment.

Separately, British prime minister Gordon Brown, who hosts a summit of G20 leaders on April 2nd, said “massive change” was about to take place in financial market regulation, notably supervision of hedge funds and other areas currently only lightly regulated.

The statement, issued by the ministers after talks to prepare that summit, said hedge funds should be registered and disclose information needed to keep tabs on risk, and that credit ratings agencies should be better controlled too.

It said the top priority now was to get lending, lifeblood of the economy, flowing normally again.

The ministers set aside differences on the scale of public spending deployed to support activity, saying everyone would do all they can to fight what the IMF calls the “Great Recession”.

The G20 accounts for more than 80 per cent of the world’s output, or gross domestic product, which is expected to shrink in 2009 by more than any year since the 1930s.

The US has yet to detail how it plans to clean up banks’ toxic assets, though a US official said details could be expected in the coming week. The G20 issued a separate set of guidelines for countries to use in planning to rid banks of rotten assets.

“You’re going to see us announce relatively quickly a new framework, a new financing framework, for these legacy assets,” said US treasury secretary Timothy Geithner, who was at the talks. – (Reuters)