European Union leaders agreed on Friday to provide €75 billion in new loans to the International Monetary Fund as part of a G20 effort to boost the lender’s firepower for fighting global recession.
The leaders also agreed at a two-day summit to double a crisis fund for struggling EU member states to €50 billion. Latvia and Hungary have already had access to the fund and Romania is expected to seek help.
But a draft summit declaration brushed off US pressure to increase the size of European economic stimulus plans and said the priority remained to see through existing recovery plans and exercise budgetary restraint.
“Now it is time to implement all those packages and promises, so I don’t think it’s time to create some more packages,” Estonian Prime Minister Andrus Ansip told reporters at the Brussels summit.
Prime Minister Gordon Brown, who will host a summit of the Group of Twenty leading and emerging economies on April 2, said the new loans to the IMF were to be provided for emergency situations. “It is money that is to be made available if it is needed as a loan to the IMF. ... It allows the IMF to intervene where countries are in difficulty,” he told reporters.
Irish Prime Minister Brian Cowen and others dismissed comments by a German parliamentarian who said the European Central Bank had drawn up a plan to prevent member states that use the euro currency going bankrupt, with Ireland and Greece top candidates for aid.
The European Central Bank said information about its role in the purported plan, outlined by Otto Bernhardt of Germany’s ruling conservative party, were untrue.
RESISTANCE TO PRESSURE ON STIMULUS PLANS
The 27-nation EU faces growing unemployment, falling production and increasing signs of public discontent over the economic crisis.
Unions said 3 million people took part in protests in France on Thursday and governments have fallen in two member states, Latvia and Belgium, since the global economic crisis began.
But EU leaders made clear they would not follow US moves to boost existing recovery measures after the Federal Reserve pledged an extra $1 trillion on Wednesday to help the US economy.
Reflecting European calls for tighter regulation to avoid a repeat of the financial crisis, the final draft called for “appropriate regulation and oversight of all financial markets, products and participants that may present a systemic risk.”
French President Nicolas Sarkozy said EU leaders had agreed to implement reforms this year based on proposals put forward by the De Larosiere group, a high-level European consultative panel, last month. “On Larosiere, legislative decisions by the end of the year,” Sarkozy said. (Reuters)