G20 finance ministers meeting in Washington have said the global recovery is better than expected.
They praised their own governments’ efforts to kick-start economies. But there were warnings against overconfidence, and the group of rich and emerging countries could not agree on recouping the cost of bailing out banks.
Although not formally on the agenda, one hot topic looming over the gathering was Greece. The 45 billion euros the Greeks are asking for in aid from the EU and IMF could make this the biggest ever national bail-out.
Finance ministers said they would not allow such debt problems to threaten the European or world economy.
Greek Prime Minister George Papandreou said his country needed help as a matter of “national and pressing necessity.” Germany is likely to bear the brunt of the cost.
“I made it clear that a decision on how and how much aid Athens will receive cannot be answered until the austerity plan is on the table,” said German Chancellor Angela Merkel.
She stressed that this was no charity handout.
“A judgment by the European Central Bank and the International Monetary Fund should make clear that it is all about the stability of the eurozone, meaning the euro,” she said.
The Greek government says that despite its austerity measures, the markets did not respond and confidence continued to fall, pushing up the cost of borrowing to record levels. In the prime minister’s words, Greece now needs “a safe harbour to rebuild our ship”.