European Union (EU) finance ministers outlined a common position on Wednesday for the upcoming talks among the G20 members on a global response to the financial and economic crisis.

As part of their common position, they agreed to increase the EU contribution to the International Monetary Fund (IMF)'s lending resources, to push for an international deal to curb bankers' bonuses and to mull plans for a coordinated gradual withdrawal of fiscal stimulus measures.

More contribution to IMF

"We have a strong common European position on the key issues," Swedish Finance Minister Anders Borg, whose country holds the EU rotating presidency, told reporters after chairing the informal meeting with his EU counterparts.

Among those key issues, EU finance ministers pledged to pay an extra US$75 billion to boost the IMF's lending resources, making the EU's total contribution US$175 billion.

EU countries had previously promised to provide 100 billion dollars to increase their share of the IMF's New Arrangement to Borrow, or NAB, as part of the global deal reached at the G20 London summit in early April to triple IMF lending resources to a total of US$750 billion.

So far, major world economies have pledged US$411.5 billion, meaning US$88.5 billion are still needed to meet the target of US$500 billion.

Ahead of Wednesday's meeting, Germany, France and Britain all said they would give more funds to the IMF in order to help those countries which were in trouble due to the global economic crisis.

But Borg said EU member states would still have to reach a consensus on how the additional funding was to be distributed among them.

In a letter to their EU colleagues on Monday, German Finance Minister Peer Steinbrueck and France's Christine Lagarde urged other EU countries to "continue to fulfill their commitments and lead by example."

The two ministers indicated that making more contributions to the IMF would help EU countries retain their voting weight in the IMF although they were expected to share some of their authority with emerging economies.

"Maintaining a significant share would ensure that EU member states' views are adequately represented," they said.

Limits on banker's bonuses

As a major supporter of the global financial reform, the EU hopes the meeting of G20 finance ministers in London later this week and the ensuing summit in the US city of Pittsburgh would produce more results in tightening financial rules.

"Regarding financial market reform, the key topics of Pittsburgh are expected to include prudential rules, remuneration policy and accounting standards," the EU said in a press release.

EU finance ministers in particular discussed the issue of possible limits on bankers' hefty bonuses.

Bankers' bonuses have become the subject of severe criticism in the wake of the financial crisis since the current bonus culture was blamed for bank managers' reckless and excessive risk-taking. This in turn fueled the financial crisis.

When bank executives received huge amounts of severance pay even if the financial institutions they managed had run into trouble, there was an uproar.

"The bonus culture must come to an end. There was a strong common European position," Borg said, adding EU countries would convey a common message to other G20 members and address the issue at the upcoming talks.

Among the EU member states, France and Germany have been pushing hard for a global deal to control bankers' bonuses at the Pittsburgh G20 summit, but doubts remain as to whether their British colleagues could be convinced.

The British government was reluctant to accept limits on bankers' bonuses, fearing London would be less attractive to talented bank managers and lose edge as one of the world's major financial centers.

Fiscal stimulus to continue

Amid early signs of recovery, there is an increasing call within the EU for gradually withdrawing fiscal stimulus measures for fear of inflation risk and the heavy burden on public finance.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia told reporters that EU countries would call for an international coordination of exit strategies at the G20 summit.

"The exit strategy from this crisis should be coordinated, first of all at the European level and of course also at the global level. We will discuss this at the next G20 meeting in London," he said.

However, Borg added that there was consensus among the ministers for plans to end fiscal stimulus at some point, but not now. He suggested the G20 summit in Pittsburg was unlikely to produce any concrete move in this regard since the time was not ripe.

Luxembourg's Prime Minister Jean-Claude Juncker, who is also the chairman of eurozone finance ministers, said although the worst part of the economic crisis was over for now, EU countries should continue fiscal stimulus in the course of this year and the next before agreeing on an exit strategy.

Analysts said timing was essential since removing the stimulus too soon would slow down the economic recovery's momentum. By contrast, slow withdrawal would increase the risk of inflation.

(Xinhua News Agency September 3, 2009)