Canada impatient with pace of Greek resolution

Tue Sep 20, 2011 11:03pm EDT
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OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty expressed impatience on Tuesday with the slow pace of dealing with the Greek debt crisis, saying the risks only rise as resolution is delayed.

Speaking two days before meetings in Washington of the Group of 20 leading economies, Flaherty said he expected "intense discussions about the situation in Europe" at those talks.

"There's risk and there's increased risk the longer this matter is delayed. We've been talking about Greece since January 2010 and the euro zone has not yet brought the matter to a conclusion," Flaherty told reporters at Parliament.

"And this can potentially affect the Europeans banks, of course, which is why it's important to ensure that they're adequately capitalized. There has been a fund created. It's questionable whether it's large enough and that is something I'm sure we'll talk about in Washington."

G20 finance ministers and central bankers will hold discussions over dinner on Thursday evening. Talks will continue in bilateral sessions and also at the annual meetings of the International Monetary Fund and World Bank.

In the run-up to this week's meetings there has been speculation on whether more stimulus or more fiscal discipline is needed, and Flaherty said that Canada would only embark on new stimulus if there was a serious economic shock.

"Nothing has changed this week. We have a serious situation in Europe. We are going to stay the course. If we're hit with an external shock from the EU (European Union) or from the United States, then we would react in a pragmatic way, as we have done before," he said, adding that Canada had fiscal maneuvering room if needed.

But he dismissed opposition calls to relax the purse strings now. "The countries that are in trouble are countries that have followed that policy of large deficits, accumulating large public debt. We're not going down that road in Canada."

(Reporting by Randall Palmer and David Ljunggren; editing by Rob Wilson)