Friday, 4 November 2011

G20 leaders agree to boost IMF resources

G20 leaders in Cannes have ended their summit with a plan to boost growth and rebalance the global economy.
The continuing eurozone debt crisis has dominated the summit.
In a closing press conference, French President Nicolas Sarkozy said: "We will fight to defend Europe and the euro."
He said the G20 had agreed to boost the resources of the International Monetary Fund (IMF) and would agree on specific steps by February.
Mr Sarkozy also said that France and Germany were in favour of a financial transactions tax and they hoped it would be implemented in 2012.
British Prime Minister David Cameron said it was "essential for confidence and economic stability" that the IMF had the resources it needed, but reaffirmed that the UK would not contribute to any eurozone bailout.
The leaders released a final communique, which:
  • Commits to move "more rapidly" towards greater exchange rate flexibility, without specifically mentioning China
  • Agrees to support the IMF and give it more money if necessary
  • Welcomes Italy's invitation to the IMF to monitor its economic reforms
  • Calls on countries with strong public finances to take steps to boost domestic demand
  • Welcomes the eurozone's plans to restore confidence and financial stability
  • Sets up a task force on youth employment
Mr Cameron disputed the suggestion that there had not been the promised agreements.
"There are agreements on both the eurozone and the IMF," he said.
"The problem is not that there isn't a deal - the problem is that not all of the details... have been put in place."
Greek problems The G20 leaders' hope is that increased resources will help the IMF to support struggling eurozone economies, such as Greece.

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The rest of the world needs to see more progress on the European rescue plan sketched out last week in Brussels before they commit any hard numbers”
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Mr Barroso said that he hoped Greece would stay in the euro, but added that the country would need to take on the responsibilities that come with membership.
Greek prime minister George Papandreou will face a confidence vote in parliament late on Friday.
Opposition politicians and some members of his government have called for his resignation, following his announcement of a referendum on the austerity measures.
The Greek finance minister said on Friday that the referendum has now been scrapped, but the announcement of the referendum caused big market falls earlier in the week.
If Mr Papandreou loses the confidence vote then Greece will have to hold fresh elections, which may further delay the implementation of a Greek bailout package.
Eurozone leaders have already withheld 8bn euros ($11bn; £7bn) of fresh rescue loans to Greece and there are fears that further delays may see the government run out of cash and default on its payments.
Italian reforms
Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
The G8 plus developing countries that play an important role in the global economy, such as China, India, Brazil and Saudi Arabia. It gained in significance after leaders agreed how to tackle the 2008-09 financial crisis and recession at G20 gatherings.
Italy's decision to call in the IMF to make sure it implements austerity measures is a response to the increasing pressure from eurozone leaders to reduce its debt levels.
On Thursday, six former allies of Silvio Berlusconi wrote an open letter urging him to resign after his government failed to agree economic reforms.
The Italian cabinet agreed a limited package of budget reforms at an emergency meeting on Wednesday evening, but they failed to agree to issue a decree implementing the changes, meaning that they must now go to a confidence vote in parliament.
"Developments in Italy are a crucial test for the credibility of the anti-crisis framework set by the European Union," said Luigi Speranza of BNP Paribas.

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