As Eurozone crisis threatened to engulf global economy, Prime Minister Manmohan Singh on Thursday warned that ‘prolonged’ uncertainty and instability in Europe will hurt other countries too and suggested that the IMF can help rescue the situation.
Observing that everyone has a stake in the orderly functioning and prosperity of Europe, including the Eurozone countries, Singh told the G-20 Summit, the International Monetary Fund (IMF) must keep the situation under ‘close watch’ as part of regional surveillance and should also be willing to help in an appropriate manner if asked to do so.
"Prolonged uncertainty and instability in the Eurozone countries can hurt us all. In an increasingly integrated world, all of us have a stake in the orderly functioning and prosperity of Europe," he said in his intervention at the Summit of the world's 20 leading economies at this French Riveria resort.
The sixth Summit in three years is meant to focus on reforms of the global monetary system and steps to rein in speculative capital flows, but has been overshadowed by the fresh Greek crisis amid talk of the possibility of a Greek pullout from the 12-year-old common currency Euro that could have contagion effect.
Singh said the announcement of a referendum by the Government of Greece has upset the ‘calculations’ to put in place quickly the agreement arrived at by Eurozone leaders for reducing the Greek debt, combined with a new EU-IMF programme providing additional resources. He hoped that ways can be found to manage the situation so that a package can be put in place as quickly as possible.
Noting that the G-20 was meeting at a time when the global economy faces exceptional uncertainty, Singh said the Summit will be judged by its ability to deal with financial instability emanating from the Eurozone periphery.
Asserting that India strongly supported the IMF playing its part in restoring stability in Europe, he said at the same time it must also keep in mind the liquidity requirements of developing countries who are not at the centre of the crisis, but may nevertheless be adversely affected as "innocent" bystanders.