Charles Robertson
Global Chief Economist at Renaissance Capital Ltd, UK
Rafael Camarena
Economist at Banco Santander, Mexico
1) After meeting with G20, the Eurozone leaders have said they will decide in March whether to lift a 500 billion-euro limit to bailout funding. However, Germany says there's no need to raise the funding limit. What the Eurozone leaders will agree on in March? Will they increase funding limit or not?
C.R. I think they will increase the limit.
R.C. I believe the Eurozone leaders will meet the requirements of G20 and will increase the funding limit. Nevertheless, it will take some time for countries like Mexico, which are willing to contribute to the fund of the IMF. I think, that finally all the G20 countries will raise money necessary for the IMF.
2) What sum of money should be raised in order to strengthen the support mechanism of the IMF against the Eurozone debt crisis?
C.R. I think that sum of money the IMF requests is enough for now, currently there is no need to do anything more. However, it would be helpful to have a bigger European bailout fund, while LTRO is good enough for now.
R.C. It is difficult to estimate. Such countries like Germany and France have enough financial resources for establishment of a stabilization mechanism. As the economic conditions of the Eurozone are fairly negative, and it shows the contraction this year, it is difficult for the governments in countries to win the support for obtaining financial resources for the IMF.
3) Is it reasonable just to close the gaps in the EU economy by pumping money into the financial "firewall", thus protecting countries against the risk of contagion, or another measures and another policy should be implemented?
C.R. I endorse the current actions of the Eurozone countries. What they really need is growth. That could be achieved through injecting the capital and implementing structural reforms. Let's hope the second one works, because that is what Germany is demanding.
R.C. In the short-term the market is waiting for the increase of financial resources of the ‘firewall'. Obviously, the Eurozone should concentrate on fiscal consolidation.