G20 to urge members to act against economic uncertainty

Fri Oct 26, 2012 4:52pm EDT
 
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By Krista Hughes

MEXICO CITY (Reuters) - The Group of 20 leading economies want financially troubled countries to make the most of safety nets, including Europe's bailout fund, to limit the uncertainty damaging the global economy, Mexican Deputy Finance Minister Gerardo Rodriguez said on Friday.

Mexico will host finance ministers and central bankers from the bloc of advanced and developing countries next weekend at a meeting that is expected to focus heavily on Europe's ongoing debt crisis, with Spain tipped as the next country to seek aid.

A deteriorating global outlook has put the focus on countries to boost growth, and a G20 official briefed on the preparations for the meeting said there was disquiet over what was seen as Spain's reluctance to ask for a full bailout.

Rodriguez declined to say directly whether Spain should ask for a financial rescue from its European partners but stressed that safety nets, such as Europe's 500 billion euro ($646.57 billion) bailout fund, were generally meant to be used.

"The G20 urges countries to take action to reduce the environment of uncertainty," he said, adding that uncertainty was costing jobs and growth.

One action could be using existing support facilities, and the G20 would support countries wanting to take advantage of available resources such as the European Stability Mechanism.

"The G20 has to show the market and the players that all this effort in setting up the famous firewalls has created firewalls which are effective, and to test that they are effective they need to be used," Rodriguez said.

Spain is under pressure to seek aid as it struggles to cope with high government debt. Europe has already set aside 100 billion euros to recapitalize banks, and euro zone sources said they expected an aid request next month.   Continued...