The G20 meeting demanded Europe to strengthen its bailout fund before leading economies provide extra support to raise the resources of the International Monetary Fund. The move has added pressure on Germany, which has already contributed the most to bailouts.
The proposed plan is to combine the European Financial Stability Fund, or EFSF, and the European Stability Mechanism, or ESM, to create a EUR 750 billion fund. This is in contrast to an earlier plan to replace the EFSF by the temporary fund.
The meeting of Eurozone ministers to be held in March will decide about boosting the region's firewall. German Finance minister Wolfgang Schaeuble expressed optimism over reaching a decision sometime in next month.
A parliamentary vote on a second Greek bailout package is due in Berlin today.
The meeting of G20 finance ministers and central bank governors held in Mexico concluded on Sunday that the review of financial firewall at European level is an "essential input" to their decision to provide resources to the IMF. The progress on European measures will be reviewed in April at an official meeting of the IMF.
An increase in the IMF lending capacity of $500 billion will be combined with an equally credible and properly sized firewall at the European level, IMF Managing Director Christine Lagarde said. "Concrete decisions will await the reassessment by euro area countries of their support facilities, planned for March."
Until the color of the money from the Eurozone is seen, the U.K. and the rest of the world will not contribute extra IMF money, U.K. Chancellor of the Exchequer George Osborne had said.
Officials also observed that increasing oil prices pose downside risks to global growth. They welcomed the commitment by oil producing nations to continue to ensure adequate supply.
Also, the G20 expressed its commitment to support growth and job creation as unemployment remains too high in many countries.
by RTT Staff Writer
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