G20 hopes for progress on EU debt crisis: Carstens

Wed Feb 22, 2012 5:39pm EST
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By Krista Hughes

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."   Continued...