February 26, 2012
Finance ministers from the world’s largest economies ratcheted up the pressure on Germany to increase the size of the eurozone’s €500bn rescue fund, saying the move would be “essential” to a decision by non-European countries to raise more resources for the International Monetary Fund.
Some European officials had hoped the eurozone “firewall”, called the European Stability Mechanism, could be increased to €750bn at the same time the IMF got commitments to raise its firepower against contagion to about $1,000bn.
But a communiqué issued at the end of a meeting of the Group of 20 ministers in Mexico City – despite efforts by European Union officials to water down the language – made clear that IMF shareholders, including the US and the UK, were unwilling to move simultaneously with the eurozone.
“There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and that the IMF cannot move forward without more clarity on Europe’s own plans,” said Timothy Geithner, the US Treasury secretary.
The political pressure puts Berlin in an awkward position ahead of a vote on Monday in the Bundestag to approve a €130bn Greek bail-out.
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