Page last updated at 21:30 GMT, Tuesday, 10 March 2009

EU backs call to double IMF funds

Czech Finance Minister Miroslav Kalousek greets his French counterpart Christine Lagarde
EU finance ministers are meeting in Brussels

European Union finance ministers have backed a call to double the money the International Monetary Fund has to help countries hit by the financial crisis.

They said the IMF funding increase to $500bn (£361bn) should be split fairly among IMF members.

The issue will be discussed at a meeting of G20 finance ministers in Sussex, England this weekend.

Ministers also agreed to a deal that will see VAT reduced on specific, more labour intensive industries.

It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis
EU finance ministers

The deal brings to an end a long running dispute within the EU about VAT exemptions. Germany in particular was concerned about lowering rates.

"There's an agreement, including on restaurants," said Portugal's finance minister Fernando Teixeira.

The deal also includes building renovations and home repairs.

More money

The IMF has warned that it needs more resources if it is to lend to countries ravaged by the financial crisis.

"It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis," the ministers said in a statement.

"EU member states support a doubling of IMF resources and are ready to contribute to a temporary increase if needed," it added.

The meeting in Brussels was disrupted by green protesters calling for more money to tackle climate change.

Reports suggest that 350 protesters were arrested by police.

"Finance ministers are giving billions of taxpayers' money to failed banks, but we're here to make sure that they also put money on the table to tackle climate change," said Thomas Henningsen at Greenpeace.

The decision came on the day the head of the IMF Dominique Strauss-Kahn predicted the world economy to shrink for the first time in decades this year.

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