Bloomberg News

G-20 to Shore Up Sovereign Financing After Meeting

January 23, 2012

(Updates with quote from Mexican official on sixth paragraph.)

Jan. 20 (Bloomberg) -- The G-20 agreed on the need to do more to support indebted nations, Mexico’s Deputy Finance Minister Gerardo Rodriguez said.

“There is consensus about shoring up several proposals that support sovereign financing programs,” for both Europe and the International Monetary Fund, Rodriguez told reporters after a meeting of representatives from the organization today in Mexico City. “The discussions that we had yesterday and today are a very important starting point in having achieved a consensus to give more resources,” he said.

The International Monetary Fund proposed this week to raise its lending capacity by as much as $500 billion to insulate the world against any worsening of Europe’s debt crisis. Officials in Mexico didn’t discuss how much they would loan the IMF, though they did agree to move forward on the issue, Rodriguez said.

Policy makers and business leaders will meet at the World Economic Forum starting on Jan. 25 after the World Bank cut its global growth forecast this month by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets.

The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, according to the World Bank.

Among G-20 countries “there is recognition of the measures that have been taken in Europe. At the same time there is also clarity that more needs to be done,” Rodriguez said.

Mexican policy makers have indicated that the country may contribute more to the IMF and would push for greater support for the fund through its leadership position in the G-20.

“This will be one of the important jobs under Mexico’s presidency, to seek out ways to financially strengthen,” the IMF, central bank Governor Agustin Carstens said Nov. 30. Mexico would be “more than willing to collaborate and offer resources to support a greater range of action” by the fund, he said.

--Editors: Philip Sanders, Jose Enrique Arrioja

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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