CANNES, France — Leaders of the world's 20 most powerful economies failed to agree on how to increase the firepower of the International Monetary Fund so that it can help stem the European debt crisis, though they acknowledged its resources should be boosted.
The leaders struggled to reach concrete resolutions at their summit in the French resort of Cannes that has been was overshadowed by Greece's political turmoil and worries about Italy, which accepted IMF supervision of its reform efforts — a highly unusual gesture toward one of the world's leading economies.
"It's important that the IMF sees its resources reinforced," Jose Manuel Barroso, the president of the European Commission, told reporters. However, any decisions on how to reinforce the IMF were left until February.
The lack of detail disappointed markets, with stocks, bonds and the euro falling. Italy's borrowing rates, in particular, hit worrying new highs.
Barroso said the IMF's increased resources would be there to help countries around the world, not just the eurozone, indicating Europe is struggling to attract help from its global partners to fight its debt crisis. German Chancellor Angela Merkel said no countries outside the eurozone had committed any money to the region's bailout fund.
Barroso said several countries had indicated they would provide bilateral loans to the IMF — which would give it more resources without collecting money from reluctant members like the United States.
The G-20 final statement said the IMF should work in the next three months on a special account that could be earmarked for the eurozone.
That way countries like the United States, which think Europe should pay for its own financial problems, wouldn't have to put any money in. And countries like Russia and Brazil, which have expressed interested in helping the eurozone, could.
The statement also said the IMF should work out a way to issue more special drawing rights, or SDRs, the fund's own reserve currency that can be exchanged for cash with central banks around the world. SDRs can just be created and do not require new commitments from IMF member states.
Finance ministers will now have to work out the details of these measures. French President Nicolas Sarkozy said the G-20 would next deal with the topic in February.
With their own finances already stretched from bailing out Greece, Ireland and Portugal — and traditional allies like the United States wrestling with their own problems — eurozone countries were looking to the IMF to use its resources and rescue experience to help prevent the debt crisis from spreading to large economies like Italy and Spain.
"Every day that the eurozone crisis continues, every day it isn't resolved, is a day that has a chilling effect on the rest of the world economy," British Prime Minister David Cameron said.
"The rest of the world outside the eurozone is saying, We are ready to do our part to help stabilize the world economy. ... But you can't ask the IMF or other countries to substitute for the action that needs to be taken within the eurozone itself."
The G-20 announcements show how dramatically the powers have shifted within the IMF.
Until two years ago, the IMF — dominated by the traditional powers in Europe and the U.S. — mostly applied the painful adjustment programs that are attached to its financial lifelines to poor and emerging economies in Asia, Latin America and Africa.
Now, it's growing powers like China, Brazil and South Africa that have to decide whether helping Europe is a worthy investment.
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