February 21, 2012 / 5:52 PM / 7 years ago

EU leaders to ask G20 to back higher IMF funds

From 2ndL-R, China's President Hu Jintao, France's President Nicolas Sarkozy, and U.S. President Barack Obama react as G20 leaders take their places for the traditional family photo at the G20 Summit in Cannes, November 3, 2011. REUTERS/Chris Radcliffe/Pool

BRUSSELS (Reuters) - European Union leaders will call at a summit next week for the world’s 20 biggest economies (G20) to agree in April to substantially boost funds available to the International Monetary Fund, draft conclusions of the meeting showed.

The IMF is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout of the euro zone debt crisis, but the plan faces resistance from the United States and other countries.

Most G20 countries say the euro zone must first put up more of its own money to resolve its sovereign debt crisis, for example by combining the lending capacities of its temporary and permanent bailout funds, which together would add up to around 750 billion euros of yet uncommitted funds.

Euro zone leaders are to decide whether to combine the two funds’ firepower at the summit on March 1-2, which means that G20 finance ministers meeting in Mexico later this week will not be able to take decisions on more cash for the IMF.

“The European Council ... encouraged G20 Finance Ministers to continue their work in view of reaching agreement on the increase of the IMF’s resources at their next meeting in April, in order to enhance the IMF’s capacity to fulfil its systemic responsibilities in support of its global membership,” according to the draft conclusion of the March 1-2 EU summit which was obtained by Reuters.

The euro zone has pledged 150 billion euros to increase IMF resources and several non-euro zone countries from the 27-nation European Union have also said they would contribute.

Reporting By Jan Strupczewski

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