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G20 focuses on IMF role in Europe debt crisis
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The Associated Press-
Leaders from within troubled Europe and far beyond are working Friday on ways the International Monetary Fund could do more to calm Europe's debt crisis.
Political chaos in Greece has hamstrung the leaders of the Group of 20 leading rich and developing economies, meeting on the French Riviera for their last day of a summit Friday. Italy's dance with financial disaster and doubts about its commitment to reforms only exacerbated the concern.
One way some countries want to increase confidence is by boosting the resources of the International Monetary Fund.
"There is a broad view among G20 leaders that there does need to be additional IMF resourcing," Australian Prime Minister Julia Gillard said late Thursday night. "Leaders recognize that it is an appropriate move…so people could be reassured."
The United States, however, maintained its position that the IMF should use its existing resources and leverage them for best use, according to Ben Rhodes, a deputy national security adviser. The U.S. is the fund's largest stakeholder.
In a historical turnaround, European leaders had hoped to use the summit to get big developing countries like China to help with money to stem the debt crisis that has rocked the eurozone for the past two years and threatens to push the world economy into recession.
A draft declaration being discussed by the leaders lays out ways in which countries rich and less rich should stabilize the world economy and achieve more balanced growth.
The document — if confirmed at their last day of meetings Friday — would commit Italy to adopting a rule by 2013 on balanced budgets, and to quickly follow through on promised reforms.
It says developing economies would commit to policies to encourage domestic demand, and the U.S. would pledge near-term measures on tax reforms, jobs and debt reduction to keep the economic recovery from turning sour.
U.S. President Barack Obama, sidelined at the summit by the focus on Europe, implored European leaders to swiftly work out details of a rescue plan, aware of the political fallout back in the United States if they fail.
Obama joined the leaders of Germany, France, Italy, Spain, the European Union and IMF for extra talks on the eurozone crisis late Thursday night.
The actions of the greater G20 depend on the viability of a broad European Union plan to save the euro, presented just one week ago.
That includes a deal with banks to forgive Greece 50 per cent of the money it owes them, and an extra €100 billion ($139 billion Cdn) in rescue loans to Athens. It also includes a pledge to strengthen banks across the continent and to boost the firepower of their bailout fund to as much as €1 trillion ($1.4 trillion). A stronger bailout fund is crucial because it would protect large economies like Italy and Spain, which are too big to be rescued, from needing financial aid.
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