G-20 aims $2t package

MEXICO CITY - The world’s leading economies worked on Sunday to line up a deal in April on a second global rescue package worth nearly $2 trillion to stop the eurozone sovereign debt crisis from spreading and putting at risk the tentative recovery.

Germany said it would make a decision some time in March on strengthening Europe’s bailout fund, a move other Group of 20 countries say is essential to clear the way for throwing extra funds into the International Monetary Fund.

The two actions are part of the G-20’s efforts to build up massive international resources by the end of April — when the group next meets — and convince financial markets they can stem the eurozone’s deep problems.

It would mark their boldest effort since 2008, when the G-20 mustered $1 trillion to help rescue the world economy. British finance minister George Osborne said there would be no additional resources committed to the IMF until eurozone countries bolstered their own efforts to stop contagion. “We are prepared to consider IMF resources but only once we see the colour of the eurozone money and we have not seen the colour of the eurozone money,” he told Sky TV. “I think that quid pro quo will be clearly established here in Mexico City.”

German Finance Minister Wolfgang Schaeuble said European leaders will tackle the adequacy of the region’s firewall during March. The issue will be on the agenda of a European Union summit next week.

Berlin’s willingness to discuss the size of Europe’s firewall marks an important shift.

Facing political opposition to a second Greek bailout in its parliament, it has balked at enlarging Europe’s rescue fund on the grounds that it would undermine efforts to impose fiscal discipline on indebted countries.

The softening of its stance came as Schaeuble said he assumes the Greek bailout package will win Bundestag support on Monday.

An agreement by Europe to merge its temporary and permanent bailout vehicles would create a $1 trillion war chest and open the door for other G-20 countries to meet the IMF’s request for $500-$600 billion in new resources, on top of its current $358 billion in funds.

Put together, this would total around $1.95 trillion in firepower.

But the G-20 has no intention of easing its pressure on Europe by giving it a strong signal now that new IMF money is in the bag. Its communique when two days of ministerial meetings end on Sunday will merely state that the world’s leading economies will review the resources of the IMF in April without setting a date for a deal, G-20 officials said.

But they left no doubt the cash is needed to calm markets and secure economic growth. “In order to overcome the crisis, you have to get ahead of the curve and have a big enough bazooka,” said Olli Rehn, European Commissioner for Economic and Monetary Affairs.