Eurozone debt dominates agenda at G20 meeting

WORLD leaders at the G20 summit in Mexico will be breathing a sigh of relief today after the pro-bailout New Democracy party claimed victory in the Greek election.

The threat of the vote going to the Syriza party, which opposes austerity measures and could have forced a Greek exit from the euro, has been hanging over the summit.

But as the two-day conference in Los Cabos gets underway, Eurozone debt pressures are still set to dominate the agenda.

“The world is facing some very difficult times, economically and financially, socially and politically,” said Charles Dallara, managing director of the Instititute of International Finance. “We need once again a global coordinated approach.”

Leaders from the 20 industrialised and developing nations, representing more than 80 per cent of world economic output, are expected to pledge to stimulate growth while balancing those efforts against steps to rein in budget deficits.

But there is still pessimism that politicians, after spending more than $1 trillion (£636.23bn) to stimulate growth – on top of $6 trillion in central bank money printing the past four years – can offer policies to restore confidence.

Central bankers are poised to fight market turbulence with emergency cash injections.

France circulated a proposal saying it wants the European Union to agree before the end of 2012 on growth-boosting measures worth €120bn – made up of some €55bn of unused EU structural development funds, €4.5 bn in project bonds for infrastructure projects and €60bn in capital to be raised by the EIB if it were given an extra €10bn in financing.

And political differences over the future shape of Europe, a US Congress bitterly divided over fiscal policy and a leadership change in China, not to mention political turmoil in Egypt and violence in Syria, all cast a troubling shadow over the meeting.

US President Barack Obama – set to meet Vladimir Putin for the first time since the Russian President regained power – reportedly wants to press Europe to resolve its debt crisis, but does not expect much progress until the European Union holds its 28-29 June leaders’ summit.