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Geithner says Europe's work not done

Saturday, February 25, 2012 - 01:13

Feb. 25 - U.S. Treasury Secretary Tim Geithner praises European leaders for the steps they have taken to tackle the debt crisis in the euro zone, but warns there is still much left to do. Geithner also says the IMF has the resources it needs and the U.S. public is divided over taxation and health care. Rough cut (no reporter narration).

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ROUGH CUT (NO REPORTER NARRATION). U.S. Treasury Secretary Tim Geithner on Saturday (February 25) praised European leaders for the steps they have taken to tackle the debt crisis in the euro zone, but warned that there was still much left to do. "I hope that we are going to see, and I expect we will see, continued efforts by the Europeans not just to deliver on the reform commitments they have made to economic policy but to the institutions of Europe and to put in place a, to use the European phrase, to put in place a stronger and more credible firewall," Geithner told a lunch hosted by the International Institute of Finance (IIF) on the sidelines of the G20 meeting in Mexico City. Many finance leaders of G20 countries, meeting in Mexico City this weekend, have demanded that Europe strengthen its firewall as a condition for providing more resources to the International Monetary Fund. Geithner said he was not concerned about the IMF not having enough resources. "I'm very confident that the world, if and when it's necessary, will do what it has done in the past to make sure that the IMF has enough resources to deal with the challenges facing its members. We've got a pretty good record of doing it. I'm not so worried about that," he said. "The second most important thing is to make sure the IMF is able and willing to deploy those resources in a way that is valuable, particularly in a financial panic or crisis," he added. Germany may not be ready to back an increase in Europe's bailout fund at a summit next week, delaying efforts to meet international demands for Europe to strengthen its defences against the region's sovereign debt crisis. The two actions would provide greater assurance to markets that the euro zone debt crisis will not spread. With regard to the United States, Geithner said given the current climate, the country was divided. "Economic policy is all politics. Our country is quite divided right now on the ultimate shape of long term tax reform and reform to our healthcare system and those are challenges we cannot put off indefinitely," he said. The G20 joined forces in 2008 to fight back against financial crisis which blew up in the United States and caused the worst recession since the 1930s. In the last two years, the chaos has spread to Europe where highly indebted countries have been locked out of debt markets and forced to seek bailouts. Euro zone officials said they do not expect a decision at a European leaders summit on March 1-2 on combining the resources of two European rescue funds. Increasing IMF resources is on the agenda when G20 finance ministers and central bankers from leading economies begin their meetings on Saturday but a deal will have to wait. In addition, the IMF is seeking additional resources of up to $600 billion which would provide an even bigger wall of cash to fight the sovereign debt crisis that has already pushed three euro zone countries -- Greece, Portugal and Ireland -- into IMF bailouts and has threatened to spread to the much bigger economies of Italy and Spain.

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Geithner says Europe's work not done

Saturday, February 25, 2012 - 01:13