G-20 tells European nations to reassess funding needs

Mexico City: Without making any firm commitment to bailout debt ridden European countries, the G-20 Ministers have asked eurozone nations to reassess the funding needs by March so that a decision could be taken regarding the quantum of support that can be provided by the IMF.

“Euro area countries will reassess the strength of their support facilities in March. This will provide an essential input in our ongoing consideration to mobilise resources to the IMF,” said the communique issued at the end of the two-day meeting of G-20 Finance Ministers and Central Bank Governors.

The Ministers of the G-20 nations, which include both rich and developing countries, are expected to take a view on enhancing the resources of International Monetary Fund (IMF) at their meeting in Washington in April on the sidelines on the IMF-World Bank Spring Meetings.

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The G-20 members, the communique said, have been actively engaged in taking the steps needed to safeguard the global financial system and to avoid adverse scenarios.

“We are reviewing options, as requested by Leaders (of the G-20 nations), to ensure resources for the IMF could be mobilised in a timely manner.

“We reaffirmed our commitment that the IMF should remain a quota-based institution and agreed that a feasible way to increase IMF resources in the short-run is through bilateral borrowing and note purchase agreements with a broad range of IMF members,” it added.

US Treasury Secretary Timothy Geithner has said that the G-20 is committed to making sure that the IMF has the resources it needs to help its members deal with the risks from Europe.

“There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and that the IMF cannot move forward without more clarity on Europe’s own plans,” Geithner said.

The IMF has been seeking $600 billion from its members to increase lending resources by $500 billion in order to protect the European nations from the debt crisis.

IMF Managing Director Christine Lagarde, however, said the amount would be determined in view of “the general crisis that the global economy faced in the last few weeks”.

“We need to be flexible: If it worsens, may be the number will be higher, if it improves, may be the number will be lower,” Lagarde told reporters here.

The weekend meeting of the G-20 ministers also called for European nations putting in their own resources to strengthen their economy rather than depending on the IMF for funds.

Besides Europe and the global economic outlook, the two-day meeting also deliberated on Iran and oil markets and financial reforms.

“We are alert to the risks of higher oil prices and welcome the commitment by producing countries to continue to ensure adequate supply,” the G-20 communique said.

“We will continue working towards the reform of the quota and governance of the IMF…The G-20 members reaffirmed their commitment to implement in full the 2010 Governance and Quota Reform…,” the communique said adding that the general review of quotas would be completed by January 2014.

PTI