The European Union said Friday it would boost its contributions to the International Monetary Fund by EUR75 billion and raise the ceiling on a facility to help out troubled EU economies in Eastern Europe.
As expected, a two-day summit meeting of the bloc's 27 leaders continued to reject U.S. pressure for bigger European economic stimulus packages. They also reiterated pledges to fight for stricter global financial regulation at a summit of the Group of 20 nations in London on Apr. 2.
The EU heads of state and government did, however, take a number of smaller steps to make more money available to tackle the global downturn if required.
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They offered a 75 billion euro loan towards doubling the IMF's available funds to rescue stricken economies, to $500 million. Japan has already offered $100 million, meaning there's about $50 billion left to raise to meet the target. Several EU leaders said they wanted to see contributions from the U.S. and China too. The U.S. has called for an even bigger boost to IMF funding.
EU leaders also said they welcomed a proposal to double the ceiling on a facility to help out troubled economies outside the euro zone, to 50 billion euros from 25 billion euros. So far, Latvia and Hungary have used the facility to draw about 10 billion euros.
Going into the talks, EU leaders had said they didn't want to raise the facility's ceiling. Pressure to calm financial-market fears about eastern European economies drove the change of heart, according to EU diplomats familiar with the matter.
Two weeks ahead of a the London summit, EU leaders also appeared to abandon a plan to push for the G20 to produce a black list of tax havens. Switzerland, Austria, Luxembourg and a rash of others jurisdictions with tight bank secrecy laws said recently they would agree new rules to cooperate with foreign tax evasion probes, in an effort to avert possible sanctions.
"As far as I can see there will not be such a list at the London meeting," German Finance Minister Peer Steinbrueck told reporters at the end of a two-day EU summit. Germany had been pushing hardest for the black list, even since the promises of cooperation were made.
EU leaders also approved a 5 billion euro package to fund technology and energy projects, including $200 million for a pipeline known as Nabucco to bring natural gas from the Caspian Sea region via Turkey. Germany had opposed funding for Nabucco, but relented once it was guaranteed the money would be spent by 2010. Critics said many of the projects would not be ready in time to use the funding.
Conclusions from the summit repeated previous defenses of the collective size of the EU's national stimulus packages, which have come under attack from the U.S. government and some economists for being too small to tackle the scale of the downturn. The IMF, in revised forecasts published Thursday, projected a 3.2% decline in economic growth for the EU this year, steeper than in the U.S.
"We must not endanger the long-term viability of European economies," by overspending, German Chancellor Angela Merkel told a news conference after the summit. The EU estimates its stimulus package at 400 billion euros, or 3.3% of GDP spread over two years.
Several national leaders and the European Central Bank denied comments by a German legislator Friday that plans were in place for an ECB fund to rescue euro zone economies - notably Ireland and Greece -- if they got into trouble, and that to receive the aid Ireland would be forced to raise its 12.5% corporate tax rate.