February 23, 2009 / 10:35 AM / 8 years ago

CORRECTED - UPDATE 1-Bailout for an EU country can't be ruled out-Almunia

(Corrects in paragraph 2 to show that Almunia mentioned Latvia and not Estonia) (Adds comment on G20)

MADRID, Feb 23 (Reuters) - The European Union could have to bail out a member state in financial trouble but such a move is unlikely, especially among countries in the euro zone, EU economic chief Joaquin Almunia said on Monday.

States such as Hungary and Latvia have received assistance from the EU, and other countries within the 27-member bloc might need a financial support programme, said Almunia, who is European economic and monetary affairs commissioner.

"You can't rule out that a country outside the euro currency might come to need this assistance," he said during an economic conference in Madrid. "We don't think we'll get to this position."

Almunia said euro zone countries were better off and less likely to need EU help. "With the euro zone the position is not the same, either in terms of public debt, foreign debt or the ability to react to this recession," Almunia said.

The comments are some of the strongest yet by a leading European policymaker on the chances of collective support for ailing European economies.

Almunia saw the upcoming G20 summit in London as a critical test for leadership during the financial crisis. He said countries had to push for a coordinated response.

"There's a risk the summit is not a success and we'll find, at a very bad, hard moment during the crisis, uncertainty over who is at the controls, who is driving," he said.

Almunia said the G20 had to reach decisions on coordination of financial market regulation as well as monetary and fiscal policy. "The alternative is protectionism. It's true globalisation has brought risks, but the biggest risk now is deglobalisation," Almunia said.

Reporting by Paul Day; Editing by Andrew Hay/David Stamp

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