No G20 deal on IMF cash this weekend, pressure on Europe

Fri Feb 24, 2012 6:01pm EST
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By Luis Rojas and Alonso Soto

MEXICO CITY (Reuters) - World economic powers told Europe on Friday it would have to do more to fight its financial crisis before they agree to provide back-up in the form of a bigger IMF war-chest.

Finance ministers and central bankers from the Group of 20 top economies are gathering in Mexico City with Europe hoping that China, Japan and others will soon commit to giving the International Monetary Fund more money so it can help euro zone countries which suffer a cash crunch.

But many G20 countries are insisting that Europe needs to take the first step by bolstering its own bailout funds.

"I expect no decision at the G20 summit on boosting the IMF's resources," said Jens Weidmann, head of Germany's central bank and a European Central Bank (ECB) Governing Council member.

The host of the weekend's meetings, Mexico's finance minister, Jose Antonio Meade, said it was "still early in the process" to discuss specific amounts and ways that G20 nations could commit more money.

The world's rich countries have used the G20 to coordinate their response to the financial crisis that erupted in 2008 after the collapse of the U.S. housing bubble and then spread to Europe where many countries are saddled with heavy debts.

As the crisis has dragged on, however, divisions over how to tackle it have deepened. The IMF wants to raise as much as $600 billion in extra resources to help deal with fallout from the euro zone debt crisis, but the plan faces resistance from countries including the United States and Canada.

The United States has told Europe to do more on its own and also made clear it will not provide more cash to help the IMF handle the crisis.   Continued...