Barroso warns G20 about need for urgent debt plan
The world's leading economies need to develop an urgent action plan this week in order to address short-term vulnerabilities in the global economy and to ensure the IMF has enough cash to continue bailing out troubled states, European Commission president Jose Manuel Barroso has warned.
In a joint letter from Mr Barroso and European Council president Herman Van Rompuy, sent yesterday to the leaders of the G20 countries ahead of this week's meeting of the organisation in Cannes, the pair said the plan would also need to address the strengthening and rebalancing of global growth over the medium term.
"Given the ongoing tensions in global markets, we also need to continue to ensure sufficient resources for the IMF to address crisis situations in a co-ordinated and comprehensive manner," they said.
Their letter, targeted at global leaders including British Prime Minister David Cameron -- who has harshly criticised the EU in recent days -- as well as US President Barack Obama, says the EU is "taking all necessary steps" to ensure the stability and growth of the euro area.
"The euro is at the core of our European project," they stressed.
Last week, EU leaders finally thrashed out a roadmap for stabilising the debt crisis that includes slashing Greece's outstanding debt and boosting the available bailout fund for the European Financial Stability Facility (EFSF) to €1 trillion.
Mr Barroso and Mr Van Rompuy said they were confident the plans adopted would contribute to a "swift resolution" of the crisis.
"However, while we in Europe will play our part, this cannot alone ensure global recovery and rebalanced growth," their letter added. "There is a continued need for joint action by all G20 partners."
This week's G20 summit on the French Riviera this Thursday and Friday will be chaired by France's Nicolas Sarkozy, whose country currently holds the G20 presidency.
Europe will top the agenda for leaders, as will issues surrounding international trade, exchange rates and commodity prices.
"Many of the distortions underlying the large pre-crisis imbalances are still to be addressed -- including undervalued exchange rates in key emerging surplus economies, and insufficient domestic savings in some advanced economies," wrote Mr Barroso and Mr Van Rompuy.
The "undervalued exchange rates" refer to China, where the value of its currency, the yuan, is kept artificially low by the government.
The head of the EFSF, Klaus Regling, was in China over the weekend attempting to persuade the country to invest cash to shore up the expanded bailout fund.