G20 ministers meeting to discuss eurozone debt crisis

2011-10-14 10:45:27

Finance ministers from the G20 group of nations are meeting in Paris later to

continue efforts to find a solution to the debt crisis in the eurozone.

While Greece remains the central focus, fears remain that the crisis could

spread to other highly indebted eurozone countries such as Spain and Italy, and

exposed European banks.

Greece needs its next bailout loan next month to avoid defaulting on its debt.

Spain was hit by a further credit rating cut on Thursday.

Standard & Poor's reduced Spain's long term rating by one notch, citing weak

growth and high levels of private-sector debt.

It came a week after fellow credit rating agency Fitch also cut Spain's rating.

On Thursday, Fitch also downgraded the creditworthiness of UK banks Lloyds and

RBS, and also Switzerland's UBS.

Funding issues

The euro rose to $1.3774 against the dollar in early Friday trading, on

optimism ahead of the meeting of G20 finance ministers.

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It is just possible that the Greek people will have their say, that they will

simply refuse to go along with austerity plans demanded by outsiders, their

creditors

image of Gavin Hewitt Gavin Hewitt BBC Europe editor

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However, analysts caution that any major decisions on tackling the eurozone

debt crisis will not be announced until the meeting of European Union (EU)

leaders on 23 October.

These are expected to include an agreement on increasing the funding and powers

of the European Financial Stability Facility (EFSF), the fund set up to help

national governments in financial difficulty.

Measures to protect European banks with high levels of exposure to eurozone

national debt are also expected to be decided by EU leaders.

According to reports, finance ministers from the Brics nations - Brazil,

Russia, India, China and South Africa - will use the latest G20 meeting to push

for the International Monetary Fund to be give more funds to tackle the

eurozone crisis.

Meanwhile, US Treasury Secretary Timothy Geithner is expected to make a fresh

call for China to allow its currency, the yuan, to trade freely.

Washington has long accused Beijing of keeping the yuan undervalued to make

Chinese exports artificially competitive.

Greek focus

Athens is now likely to get its next loan instalment in November after

inspectors from the EU, International Monetary Fund (IMF) and European Central

Bank said they had reached agreement with the Greek government on further

austerity measures in the country.

The representatives from the so-called troika had been in Athens to check on

whether the Greek government was carrying out sufficient spending cuts and tax

raising measures.

Greece's next 8bn euros ($11bn; 7bn) payment of EU and IMF funds has been

delayed since the troika inspectors called off earlier inspections in Athens at

the start of September.

However, inspections resumed after the Greek government pledged further

austerity moves, despite widespread protests.

Protests against spending cuts are also continuing in Spain.