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UPDATE 1-EU urges doubling of IMF funds -- summit draft

Published 03/20/2009, 03:01 AM
Updated 03/20/2009, 03:16 AM

* EU seeks doubling of IMF resources

* No mention of size of EU contribution

* EU leaders respond to China over IMF

(Adds new details and background)

By Mark John

BRUSSELS, March 20 (Reuters) - European Union leaders have agreed to call for a doubling of IMF resources to enable it to help countries hit by the global economic crisis, according to a final draft to be presented to an EU summit on Friday.

The draft, still subject to last-minute changes, said the EU would propose to April's G20 summit in London to "double IMF resources so that the Fund can help its members swiftly and flexibly if they experience balance of payment difficulties".

It made no reference to the size of the possible EU contribution to any doubling. EU officials said on Thursday the 27-nation bloc would make a contribution of $75 billion but wanted to consult first with other Group of 20 countries.

In what will be seen as a response to China's wish for a stronger voice within the International Monetary Fund, the draft called for reform of the IMF so that it "reflects more adequately relative economic weights in the world economy".

EU leaders also agreed to keep the ceiling of an existing 25 billion euro ($33.73 billion) bloc crisis fund for troubled European states under review.

There was no direct reference to a proposal by the European Commission for the ceiling of the fund, already used by Latvia and Hungary, to be doubled to 50 billion euros if needed.

Diplomats said the proposal had won broad support among EU leaders.

Reflecting European calls for tighter regulation to avoid a repeat of the global economic crisis, the draft urged "appropriate regulation and oversight of all financial markets, products and particpants that may present a systemic risk". (Reporting by Mark John; editing by Ingrid Melander and Ralph Gowling)

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