G20 to meet with eurozone again in limelight
Friday, 02 November 2012
MEXICO CITY: The Group of 20 world powers meets Sunday to tackle fears of a new global economic downturn and renew pressure on Europe to contain its stubbornly tenacious debt crisis.
G20 finance ministers and central bank governors will hold two days of talks in Mexico City as the troubles in Greece continue to vex the eurozone while Spain keeps everyone guessing if it will ask for a bailout.
While the fiscal situation in the United States is also a major concern, officials do not expect any movement on that front until after the US presidential election, which takes place on Tuesday.
"What we need, and we hope to be able to do it during this meeting, is to stress how we can reduce these uncertainties, resolve issues so that the environment can be more conducive to growth," said Mexican Deputy Finance Minister Gerardo Rodriguez Regordosa.
"All this uncertainty discourages economic players from taking decisions," said Rodriguez, whose country will hand over the G20 rotating presidency to Russia on December 1.
The meeting is a follow-up to a June summit in the Pacific resort of Los Cabos, where G20 leaders declared that they stood ready to coordinate "fiscal actions" to boost domestic demand if economic conditions deteriorated.
Since Los Cabos, the International Monetary Fund slashed its 2012 global growth forecast to 3.3 percent, eurozone unemployment rose to a record 11.6 percent in September and growth decelerated in emerging nations.
"You won't be surprised. Europe will be one of the themes of the G20," a German official said. "Europe must present a long-term crisis management."
The eurozone has taken steps to meet its Los Cabos pledges, moving closer to a banking union and activating a new crisis firewall, the 500-billion-euro ($650 billion) European Stability Mechanism (ESM), while the European Central Bank unveiled a bond-buying program.
The markets have been relatively calm since the summer.
"The G20 has been very emphatic, and will continue to be so, that we must show to the markets and (economic) actors that all this effort in building the famous firewalls has led to firewalls that are effective," Rodriguez said.
"And to prove that they are effective, they must be used," he said.
He refused to say whether Spain should ask for a bailout but Madrid insists that it does not need outside help. Spanish Economy Minister Luis de Guindos is a guest at the G20 talks.
A senior Canadian finance ministry official said there was a need for greater clarity around Spain and the path forward for it and other struggling eurozone nations.
But the epicenter of concern in Europe has shifted back to Greece.
Athens is locked in negotiations with European Union and IMF auditors over austerity measures Greece must take in return for bailout funds it needs to avoid defaulting on its debt.
Greece has asked for fiscal targets to be pushed back another two years, to give it more room to rekindle economic growth after a crushing austerity program sent it into a deeper recession than the lenders had expected.
A French government source said eurozone officials will reassure G20 partners that "things are moving forward" ahead of a November 12 meeting of eurozone finance ministers.
While Europe will seek to reassure it is acting on its debt crisis, the United States is not expected to give more clarity about its looming "fiscal cliff" -- a mix of spending cuts and tax hikes that take effect in January if the White House and Congress fails to strike a deal by the end of the year.
US Treasury Secretary Timothy Geithner is not traveling to Mexico City, sending a deputy in his place while US President Barack Obama and Republican Mitt Romney are locked in a close race for the White House. (AFP)