EU aims to double emergency cash

Published by rudy Date posted on March 20, 2009

The EU has said it may double to 50bn euros (£47bn; $68bn) the amount of emergency funding to help member states that need urgent budget support.

European Commission President Jose Manuel Barroso said he was confident the deal would be reached on the final day of a two-day summit in Brussels.

Meanwhile, EU leaders resisted US calls for more government spending to stimulate their crisis-hit economies.

They said the focus should be on reforming the global financial system.

They are also planning to boost the resources of the International Monetary Fund to help countries in trouble.

The Brussels summit, which opened on Thursday, takes place as the world’s biggest economies prepare for next month’s G20 summit in London.

Mr Barroso said doubling the emergency funding ceiling to 50bn euros would be “a good signal that the EU is ready to show solidarity and support… to the countries that may need it”.

The emergency cash is only for member states outside the 16-nation eurozone.

Hungary and Latvia have already received about 10bn euros (£9bn) to deal with their balance of payments crises.

Romania is the next member seeking a bail-out, the BBC’s Oana Lungescu in Brussels says.

‘Deadly idea’

Separately, the EU leaders ruled out an extra stimulus package, despite calls from Washington for one.

“Trying to outdo one another with promises will certainly not bring any calm to the situation,” said German Chancellor Angela Merkel, who has led calls for European fiscal restraint.

Czech Prime Minister Mirek Topolanek, whose country is holding the EU’s rotating presidency, said the leaders were “unanimous in their views” that they “are going to be prudent” with economy stimulus plans.

He warned that any more deficit spending was “a deadly idea”, adding that EU leaders were awaiting the results of the 200bn-euro (£188bn) package agreed in December.

With output tumbling and millions of jobs at risk across the continent, EU leaders seem to have few fresh ideas to offer and little appetite to throw more public money at the crisis, our correspondent says.

EU leaders also approved a plan to spend several more billion euros on upgrading energy and broadband connections.

This included funds for a controversial gas pipeline project meant to reduce Europe’s dependency on Russian energy.

The plan was agreed in response to the gas dispute between Russia and Ukraine in January that led to severe shortages for millions across Eastern Europe.

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