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EU finance ministers to back doubling of IMF funds at G20
Mon Mar 9, 2009 3:08am EDT
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By Jan Strupczewski
BRUSSELS (Reuters) - European Union finance ministers will on Tuesday back a call from the International Monetary Fund to double its funds to $500 billion at the G20 finance ministers' meeting this week, a document showed.
The paper, obtained by Reuters, spells out the EU position on economic policy, regulation, international institutions, the IMF and Multilateral Development Banks for the G20 finance ministers and central bankers meeting on March 13-14.
"It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis," said the draft document, to be approved by ministers of the 27-nation bloc on Tuesday.
"EU member states support a doubling of IMF resources and are ready to contribute to a temporary increase, if needed," it said. It said the increase should be funded by direct borrowing from members, especially those with large currency reserves.
"The additional resources should be mobilized in the first instance via enlarging and expanding the NAB (New Arrangements to Borrow), on the basis of a fair burden-sharing, notably by encouraging countries that over the last years have accumulated significant foreign reserves to participate," the paper said.
PREVENT FUTURE CRISES
G20 officials will on Friday and Saturday discuss how to deal with the global financial and economic crisis, which has made several European countries turn to the IMF for help.
Apart from more money, the EU will support giving the IMF more powers in economic and financial surveillance to prevent future crises. The IMF should be able to make recommendations.
"The IMF's recommendations ... should become a key internationally shared guideline for macroeconomic policies," EU finance ministers are to tell their G20 counterparts.
On macroeconomic policy, EU finance ministers will tell their counterparts that cooperation on restoring the normal functioning of credit markets was essential, as was avoiding all kinds of economic protectionism.
"Countries should also avoid exchange rate devaluations aimed at gaining short-term competitive advantages," the paper said.
It said that, with fiscal stimulus packages already agreed, the focus should now be on their swift implementation, but that the sustainability of public finances was crucial.
"Once the recovery takes hold, an orderly reversal of the macroeconomic stimuli is warranted," the ministers will say.
EU ministers will also say that multilateral development banks should have adequate capital to help members counter the economic consequences of the crisis, but that the need for increasing resources should be assessed on a case-by-case basis.
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