G 20 Summit

November 4, 2011 by staff 

G 20 SummitG 20 Summit, The leaders of the largest economies in the world is focused on strengthening the International Monetary Fund, and fighting for a way to help Europe contain his fury debt crisis without exacerbating their own money problems.

But much attention in the elegant seaside town of Cannes in southern France is focused on Greece, where Prime Minister George Papandreou is facing a confidence vote in Parliament.

The abandonment of a referendum on the bailout deal last week may have provided some market concerns about a Greek debt default messy, but the country’s debt crisis began in Europe remains mired in the confusion that could see the fall of the socialist government and call early elections.

On his last day of their meeting, the leaders of the Group of 20 is looking for ways to increase the firepower of the IMF, the institution that was created as a lender of last resort for governments struggling after the Second World War.

People familiar with the talks said the G-20 is likely to see the IMF more resources, such as leaders realize they have to send a signal of confidence.

With its own finances and stretched from the rescue of Greece, Ireland and Portugal – and the traditional U.S. allies, struggling with his own problems – eurozone countries are looking to the IMF to use its resources and experience of rescue help prevent the spread of the debt crisis of major economies such as Italy and Spain.

However, within the IMF, the authorities have changed.

Until two years ago, the IMF – dominated by the traditional powers of Europe and the U.S. – Applies most painful adjustment programs that are attached to its financial lifeline to the poor and emerging economies in Asia, Latin America and Africa.

Now, power is increasing as China, Brazil and South Africa, which has to decide whether to help Europe is a good investment.

The political turmoil in Greece in recent days and doubts over whether the Italian Prime Minister Silvio Berlusconi, can be trusted to implement promised reform measures meant to revive the country’s poor economy and reduce its huge debt have not helped.

But at the same time, the ensuing market turbulence has increased the need for greater financial safety nets in Europe.

Last week, eurozone leaders decided to increase the firepower of its bail-out fund euro440 million (and 606 billion) by seeking funding from outside investors. These additional resources could be used to buy bonds of tottering countries like Italy and Spain, and help them and others to recapitalize the banks affected by the turbulence in the markets.

However, cash-rich countries such as China, Russia and Brazil, quickly made it clear that any investment on your part would have to be channeled through the IMF. To ensure that their loans are tied to strict economic conditions and could also give them more influence in the background.

People familiar with the talks said that an absolute increase in direct loans with the IMF was unlikely, since it was still strong opposition from the United States and others who want to commit additional taxpayer money when they are trying to control the spending.

One option that has emerged from the talks in Cannes in recent days is that the IMF to establish a “separately managed accounts” or trust – essentially the special funds would be overseen by the IMF, but does not use any of their own resources – that could act together with funds from the rescue eurozone itself, the people said.

Another way to give the weight of the IMF would be an overall increase in special drawing rights, the source said. Special Drawing Rights, or SDRs, are the institution’s own assets in reserve which can be redeemed for cash by central banks around the world. Special drawing rights special could also be used to increase the rescue fund in the euro area.

However, sources who were speaking on condition of anonymity because the talks are closed, warned that continued fighting leaders in the various options, and it was still unclear which option would be to finish in the final communique.

The leaders also discussed the expansion of the IMF’s toolkit by creating new flexible credit line for countries around the world, including the euro area, which came under sudden market pressure amid the crisis. Officials said the talks were fewer divisions than those of the IMF’s resources, such as finance ministers from the G-20 had already asked Christine Lagarde fund manager to develop a list of new instruments for the summit in Cannes.

The activists, who had come to town to push for a change in the strategy of G-20 crisis to focus on the use and development and “people do not, finance, the” deception abounds on what little is can achieve.

“There is no doubt that funding remains dominant,” said Sharan Burrow, secretary general of the International Trade Union Confederation.

“It’s still in the way of the real economy gets in the way governments interact with people, with the unions, workers, entrepreneurs to rebuild the real economy, the rebuilding of demand” .

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