EU finance officials agree on boost to IMF funding

They also pledged to start reducing their budget deficits by 2011 at the latest to try and stabilize their economies.

By
March 11, 2009 11:55
2 minute read.

 
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European Union finance ministers agreed Tuesday to urge governments to double the International Monetary Fund's resources to $500 billion and give it a key role overseeing risks to the global economy. They also pledged to start reducing their budget deficits by 2011 at the latest to try and stabilize their economies - although they warned that it is hard to count on a turnaround next year because the financial crisis could still slow the economy down. EU heads of state and government were expected to back the call for more IMF money at a summit March 19-20 in Brussels. German Finance Minister Peer Steinbrueck said finance ministers from the EU's 27 nations were not pleased at US comments that Europe has not done enough to stimulate the global economy. "There was a certain surprise about it," he said of comments US presidential adviser Larry Summers made in an interview with the Financial Times on Monday. "The level of information should be weightier before making such statements." Germany has been criticized for its reluctance to spend and stimulate its economy, Europe's largest. Many other European nations with less money to spend would benefit from a German recovery. But the 16 nations that use the euro don't plan any new stimulus until they see how current plans are working - and they might not see results from those until next year, EU officials said Monday. EU nations are preparing to call on the US and other nations to commit to far greater oversight of financial markets at a meeting of the G-20 group of the world's leading industrialized and emerging nations on April 1-2, while US officials are expected to focus on stimulus efforts over regulation. Finance ministers said in a statement that they wanted to give far more power - and money - to the IMF to allow it watch out for new economic crises. They said a "substantial" financial boost to the IMF was a necessary to help countries hit hard by the global financial crisis. And they called for "comprehensive and ambitious" financial reforms that would include oversight of hedge funds and credit rating agencies and better standards for trading credit derivatives. But finance ministers did not discuss any new efforts to help eastern European nations hit by the global downturn. British Treasury chief Alistair Darling had called Tuesday for EU governments to do more. He said governments in the region needed some $100 billion to pay the bills this year. Austrian Finance Minister Josef Proell said Monday that the EU's 27 nations needed to think about increasing the €25 billion fund earmarked for EU members that don't use the euro. Romania will become the fourth country from the region to seek a bailout from the EU, the IMF and the World Bank, officials said Monday, following Hungary and Latvia - both EU members - and Ukraine.

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