No new cash at G20, IMF to monitor Italy
Prime Minister Manmohan Singh with Canadian PM Stephen Harper and Australian PM Julia Gillard during the third working session
The euro zone won verbal support but no new money at the G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.
Leaders of the world’s major economies old Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the IMF. “There are hardly any countries here which said they were ready to go along with the EFSF (euro zone rescue fund),” German Chancellor Angela Merkel said. China and Brazil wanted to see more detail before they made any firm commitment.
Global stocks and the euro fell as doubts resurfaced about Europe’s financial rescue package. US President Barack Obama joked about the complexity of the EU’s “laborious” decision-making process but said he was confident Europe had the capacity and the right plan. But Australian PM Julia Gillard summed up the mood of many summit participants when she said: “Europe needs to get its own house in order.”
The summit began under the shock of Greece’s since withdrawn plan to hold a referendum that could have catapulted it out of the euro zone, and ended with Italy being pressed to restore its credibility on financial markets. Italian PM Silvio Berlusconi, his government hanging by a thread, said Italy would welcome quarterly IMF monitoring of long delayed pension and labour market reforms and privatisations.
Given the size of its economy, Italy poses a far graver risk than Greece. The IMF’s new role takes the crisis to a new level and suggests markets no longer trust the EU to police its own economies.
Post new comment