Friday, September 23, 2011Canada's Flaherty:'Sooner The Better'For European Bailout Plan
European policy makers need to act swiftly to provide financial support for Greece as well as other European countries with sovereign debt problems, and need to make sure their support is adequately sized, Canadian officials said Friday.
"Decisive action is needed and it is important that it be of sufficient scale to restore confidence," Canadian Finance Minister Jim Flaherty said during a briefing on the sidelines of the IMF/World Bank semi-annual meetings.
"The sooner the better, uncertainty and delay are the enemies," Flaherty said, adding that the Eurozone should be "flexible" to adjust their support package.
Seventeen member Eurozone countries have agreed upon a rescue package called the European Financial Stability to help ailing European countries, and as recently as July 21 agreed to up their total support to E440 billion. While the total amount has been agreed upon, the EFSF still has not been ratified.
"Our view has been that this problem in Europe needs to be overwhelmed as the Americans overwhelmed theirs" Flaherty said, referencing the U.S. bank bailout in 2008.
Flaherty said he expects the Europeans to follow through with their commitment to the EFSF but unlike the U.S. bailout, the Europeans need to get 17 different countries to agree.
"They should accelerate their decision making process," Flaherty said, adding "it does result in some frustration because we have been talking about Greece since January 2010."
Bank of Canada Governor Mark Carney, who was briefing alongside Flaherty, said European situation is "fixable" and "manageable" adding that European countries have the necessary resources but need the "political will" to act ahead of markets.
Carney said while the European debt crisis poses risks to Canada, they remain mostly external and that Canada is well positioned and has a credible medium term fiscal consolidation plan.
"If the global situation deteriorates we will be pragmatic and have the flexibility to adjust if required," Carney said.
