Euro zone countries are likely to reach a deal during March on raising the combined capacity of their bailout funds, in time for a follow-on deal on more crisis-fighting funds for the International Monetary Fund in April, Europe's top economic official said on Saturday.
Olli Rehn, the European Union's Economic and Monetary Affairs Commissioner, said euro zone countries were in constructive talks with Germany, which has opposed boosting the bailout funds.
I expect that in March we will reach an agreement over reinforcing the euro area financial firewalls by combining the resources of the permanent European Stability Mechanism and the remaining resources of the European Financial Stability Facility (EFSF), Rehn told reporters.
The negotiations are now going on, I am confident that in the course of March, we will be able to take a decision on the reinforcement of the combined lending capacity of the ESM and the EFSF, he said on the sidelines of a meeting of finance ministers of the world's 20 biggest economies, the G20.
Asked what he expected the G20 ministers could declare, in their final statement after the meeting, on the request by the IMF to almost double its resources by $600 billion, in the absence of a euro zone deal to boost its bailout funds, Rehn said:
Europe sees it as essential that we can agree on a road map to reinforce IMF resources so that the decision can be taken by or in the IMF spring meetings in April.
(Reporting By Jan Strupczewski; Editing by William Schomberg and Chizu Nomiyama)