Group of 20 economic powers will be unable to decide this weekend how to provide the IMF with more resources to help ease Europe's debt crisis, Mexico's finance minister said on Friday
It's still early in the process to start to discussing ways and amounts precisely, said Jose Antonio Meade, who is hosting a meeting of Group of 20 finance ministers and central bankers in Mexico City this weekend.
The world's economic powers have used the G20 to coorindate their response to the financial crisis that erupted in 2008 after the collapse of the U.S. housing bubble and then spread to Europe where many countries are saddled with heavy debts.
Europe hopes the G20 will soon commit to increasing resources for the IMF but many countries in the group are insisting that Europe first bolster its own bailout funds to quell any future deepening of the debt crisis.
EU leaders will meet next week to discuss those bailout funds and it is unlikely that the G20 countries will promise more money funnelled through the International Monetary Fund until Europe shows it is acting aggressively to help itself.
Still, some member countries are pushing the G20 to at least outline the mechanisms it would use to help.
We don't expect a deal on IMF financing this time around, but we want to see specific language in the communique on the mechanisms that could be used to boost IMF resources, a Brazilian government official said, speaking on condition of anonymity.
The IMF wants to raise as much as $600 billion (377.8 billion pounds) in extra resources to help deal with the fallout from the euro zone debt crisis, but the plan faces resistance from countries including the United States and Canada.
As policy makers squabbled over whether and how to boost the IMF's firepower, a group of international bankers called on the G20 to work harder to boost growth, warning that the euro zone crisis threatens to hit the global economy.
Policymakers should work on reducing euro-area strains, take a more balanced approach toward financial regulation and step up their policy coordination to improve the global growth outlook, the Institute of International Finance said on the eve of the G20 meeting here.
The IIF welcomed the progress Europe has made in addressing its sovereign debt problems through an emergency bailout fund, central bank liquidity, and toughened fiscal rules. But it cautioned that budget cutbacks in weaker countries like Greece and Spain could severely damage long-term growth prospects.
While necessary, fiscal austerity will in the short term weigh on already sub-par growth, it said. Mitigating the impact of fiscal austerity is key.
(Additional reporting by Stella Dawson and G20 reporting team; editing by Kieran Murray and William Schomberg)