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G20 finance ministers open door for larger IMF role in fighting crisis

Ministers from the world’s 20 major economies invite the IMF to come up with a plan of action for fighting the debt crisis.

Image: Charles Platiau/AP

THE FINANCE MINISTERS of the world’s 20 largest economies have ended a summit in Paris with an invite to the International Monetary Fund to do more to solve the European debt crisis.

The communique issued by the leaders at the end of their Parisian meeting invited the IMF to come up with a new list of tactics which could be used if the crisis spreads beyond the three countries already bailed out.

The invitation is essentially an appeal for the IMF to become a more active player in the fight to keep Italian and Spanish borrowing costs within reasonable limits.

IMF managing director Christine Lagarde told reporters that her fund had been asked to come up with “instruments that are more flexible, more short term, that allow countries in good economic health but in difficulty, to resist.”

The admission from Lagarde that the invitation would be given clear consideration marks the first time that the fund is apparently accepting a greater role in fighting the European crisis.

It remained unclear, however, as to whether the invitation for a greater IMF role was universally agreed upon – with the United States’ treasury secretary Timothy Geithner being openly  opposed to that prospect.

Barack Obama and Germany’s chancellor Angela Merkel had earlier spoken by telephone to discuss options for containing the crisis, where it is thought that Obama underlined the risks posed to the US if the problems cannot be contained within Europe.

White House spokesman Jay Carney said the two had “agreed to stay in close contact” after the phone call, ahead of the summit of G20 heads of state taking place next month, which will now discuss the proposals put forward by the finance ministers.

Merkel followed the phone-call with a statement where she said there was ‘no quick solution’ to the crisis.

About the author:

Gavan Reilly

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