G-20 to consider IMF resources
PARIS (AP) — The finance chiefs of the Group of 20 rich and developing nations say they will make sure that the International Monetary Fund has all the resources it needs to help stabilize the world economy.
That commitment is a hint that the world's leading economies may be open to a larger role for the IMF in the eurozone debt crisis — and if necessary increase its resources.
The G-20 said in a statement Saturday, "We committed that the IMF must have adequate resources to fulfill its systemic responsibilities."
They said they would discuss the question of IMF funding at a summit of G-20 leaders in Cannes, France, in early November.
However, officials said earlier Saturday that several countries, including the U.S., were still resisting an increase in the IMF's resources.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
PARIS (AP) — France was pushing Saturday for the IMF to play a larger role in efforts to stop the spread of Europe's debt crisis, but other heavyweights from the Group of 20 club of rich and developing nations were resisting any such expansion, according to officials.
The International Monetary Fund — the world's lender of last resort for cash-strapped countries — has funded about a third of the cost of the bailouts of Greece, Ireland and Portugal.
Concerns are now growing that larger economies, like Italy and Spain, could falter — likely sinking numerous European banks, dragging the eurozone into recession and sending shock waves through the world economy. As a result, finding a way to help Greece dig out of its debts and prevent the crisis from spreading is the focus of the G-20 finance ministers' meeting in Paris this weekend.
In recent days, some G-20 countries have suggested that one solution could be to allow the IMF to do more, since the price tag for ensuring that the crisis doesn't infect larger economies is likely to be enormous. The mere presence of the IMF in the fight against contagion could also lend the effort more credibility — and ultimately lower the cost.
But the U.S. and others have indicated they think the IMF should stick to its current role.
To prevent Italy's and Spain's borrowing costs from skyrocketing — as they did in the countries that were forced to take bailouts — the euro440 billion ($608 billion) European Financial Stability Facility, is expected to soon start buying their bonds on the open market.
But that's an expensive proposition, and some have argued the EFSF isn't big enough to do it effectively. European officials are discussing ways to stretch the EFSF's money further, but even then it may not be sufficient.
Enter — possibly — the IMF.
Three G-20 officials said Saturday that a bigger role — and more money — for the IMF was being debated at the meeting. They stressed, however, that a decision on a broader IMF role would be made at the G-20 leaders summit in November — only after Europe unveils its grand plan to stamp out the crisis at a summit on Oct. 23.
One of the officials, though, said he thought the IMF role was unlikely to be expanded. He described a tussle between France, which is advocating an expanded role for the IMF, and the U.S., Canada and Australia.
All of the officials spoke on condition of anonymity to talk about sensitive negotiations.
On Friday, U.S. Treasury Secretary Timothy Geithner threw cold water on an expansion for the fund, stressing that Europe had enough cash to resolve its troubles on its own and that the fund already had sufficient money anyhow.
"The IMF has very, very substantial uncommitted resources because of the actions we took in '09 and 2010," Geithner said in an interview on CNBC. "If Europe has a comprehensive strategy in place that looks like it makes sense and is using the very ample financial resources of Europe, then we're happy to see the IMF play a continuing role, as it's been playing in supporting what the Europeans are doing."
AP Business Writer Gabriele Steinhauser contributed to this story.