MEXICO CITY (Reuters) - European powers must quickly finalize plans to support Spanish banks, which could mark an important step towards resolving the region’s debt crisis, Mexican President Felipe Calderon said on Tuesday.
Speaking ahead of a June 18-19 summit of Group of 20 leaders in the northern Mexican resort of Los Cabos, Calderon said he expected important progress to be made in resolving the 2-1/2 year-long crisis.
Markets are skeptical about a deal by euro zone finance ministers on Saturday to lend Spain up to 100 billion euros ($125 billion) to recapitalize its banks and Calderon, whose country holds the rotating G20 presidency, said it was vital to put the seal on the plan quickly.
“The decisions which were announced at the weekend ... really do open the door to finding a solution to the case of Spain and at the same time making an enormous step towards resolving Europe’s economic problems,” he told reporters at a news conference in Mexico City. “I would argue for these proposals to be firmed up quickly.”
The G20 meeting looks set to be dominated by troubles in the euro zone, starting a day after an election in Greece which could decide whether the country will remain in the currency union.
Fanning fears that the euro zone’s woes could spread, Austria’s finance minister said Italy may need a financial rescue because of its high borrowing costs.
Calderon said the leaders’ aimed to come up with concrete steps to support global growth, but did not elaborate on potential measures.
“(The action plan) will not only include measures to confront and resolve the European crisis, which is ultimately an economic crisis, but will also put forward concrete measures on public policy in key areas in the realms of tax, finance and monetary policy, which will help to boost global growth in the long term.”
A European source said the leaders’ action plan might include commitments to roll back austerity in certain countries, but it was too early for Europe to give specifics on its growth pact because of an EU summit on June 28-29.
In a nod to a recent depreciation of Mexico’s peso, Calderon said economic uncertainty would continue to fuel fluctuations in exchange rates, which are expected to be another topic of discussion at the summit.
German officials, keen to keep the agenda broad, urged consideration of China’s yuan and U.S. budget problems.
“The euro zone will surely be a topic, but as Europeans we also want to talk about other themes related to the global economy that go beyond the euro zone, for example budget consolidation in the United States, currency flexibility in China and structural reforms in emerging markets,” one of the officials told reporters.
“We think when talking about global growth it is important to look beyond the euro zone, not to limit the discussion to Europe.”
Germany, the European Union’s paymaster, has taken a hard line in favor of tough fiscal targets over the past several years. Recently, however, it has softened its tone and agreed to allow Spain more time to cut its deficit as Madrid battles a deep banking crisis.
There is a growing push in the euro zone, led by newly elected French President Francois Hollande, to do more to stimulate growth and not just focus on reducing deficits.
Additional reporting by Daniel Flynn in Paris and Noah Barkin and Gernot Heller in Berlin; Editing by David Gregorio