MEXICO CITY (Reuters) - Group of 20 policymakers are hoping for a signal this weekend that Europe will boost crisis funding, smoothing the way for a deal to increase International Monetary Fund resources, the head of Mexico's central bank said on Wednesday.
G20 finance ministers and central bankers will meet in Mexico City on Saturday and Sunday, with all eyes on the euro zone and the bloc's response to its sovereign debt crisis.
Agustin Carstens, Mexico's central bank governor, told Reuters the agreement on a second bailout package for Greece reached this week was welcome but did not obviate the need for Greece to implement planned budget cuts.
The euro zone had to contain contagion from the crisis, he said, pointing to talks between European Union leaders next week about combining the lending abilities of two EU bailout funds, which together would add up to about 750 billion euros ($992 billion) of still-uncommitted funds.
"We know that this is on the agenda for discussion in March, so we will be hoping for some progress in this direction," he said when asked what kind of reassurances G20 countries would like to see from Europe at the meeting.
"Once this has happened, I hope that discussions about the IMF can proceed with more fluidity."
G20 officials who spoke on condition of anonymity said Europe was prepared to make a signal on a stronger firewall on the understanding the final communique would then make a reference to boosting IMF aid to crisis victims.
Asked if he expected European countries to give a signal that they were ready to combine the funds' firepower, Carstens said: "We will have to wait and see," adding, "Of course that would be good."
The IMF is seeking to more than double its firepower by raising an extra $600 billion to help countries deal with the fallout from the debt crisis, but the plan faces resistance from countries including the United States and Canada.
Treasury Secretary Timothy Geithner and Financial Stability Board Chairman Mark Carney are among those scheduled to attend the weekend meeting, along with officials from developing powers such as Brazil, India and China, whose support is crucial for any boost to IMF resources.
Underlining the U.S. stance, Lael Brainard, Treasury's under secretary for international affairs, said it was critical for Europe to put up a convincing firewall before any talk of extra IMF funds.
EU leaders will decide whether to combine the temporary and permanent funds at a March 1-2 summit. Draft conclusions seen by Reuters show they plan to call for the G20 to boost IMF funds in April when policymakers meet again in Washington.
"It is highly unlikely that the G20 will reach a concrete agreement on IMF funding this month," one official from the bloc said. "It's impossible that a decision on IMF resources could come first before the euro zone comes up with its own firewall."
Another G20 official said about $250 billion of the extra IMF funding would come from Europe and the onus was on China and Japan to provide most of the rest, with small contributions also possible from Brazil, Argentina, Switzerland and Australia.
Japanese Finance Minister Jun Azumi said on Tuesday policymakers were not yet at the stage of deciding the size of individual contributions.
"It is possible we will have only a 'tour of the table' on increasing IMF resources at next Saturday's meeting," a third G20 official said.
Additional reporting by Michael O'Boyle in Mexico City, Francesca Landini in Milan and Jan Strupcewski in Brussels; Editing by Kenneth Barry