PARIS: Finance ministers from the G20 bloc of leading economies pressed Europe to tackle its debt crisis to stave off a global downturn as they gathered in Paris for tense talks on Friday.
Eurozone leaders were celebrating Slovakia's delayed ratification of new powers to the currency union's bail-out fund, but there was no respite from the crisis, with Spain's credit downgrade underlining the threat to banks.
Group of 20 ministers from outside the eurozone made it clear heading into the Paris meeting that they expected answers from Europe on how it is coming to grips with the debt crisis.
Europe is scrambling to deal with fears of a default by Greece -- and possibly other European nations -- that could send shockwaves through the continent's financial and banking system.
European officials have already warned that banks could lose more than the 21 percent on Greek sovereign bonds already agreed on, and that public support will be a last resort for those who fail to build up core capital buffers.
Japan, the United States and other nations have pressed for Europe to come up with a detailed plan to prevent the eurozone's weakness from pushing the world back into widespread crisis and recession.
"We have heard a lot of promises from eurozone countries but actions to date have fallen short of what is needed," Canadian Finance Minister Jim Flaherty said before departing for Paris.
"It is critical that Europe deliver on a comprehensive package of measures that will address the sovereign debt."
"Clear and decisive action is critical to restoring confidence," he said.
South African Finance Minister Pravin Gordhan said Europe had been "behind the curve" in dealing with its financial crisis and that solutions were needed in time for the summit of G20 leaders on November 3 to 4 in Cannes.
"We are looking for assurances from our European colleagues that by the time the summit of the G20 takes place, we will have a clear message that will create confidence that Europeans are dealing with these issues and that the world can begin to stabilise itself," he said.
He warned the resources of the International Monetary Fund and Europe's rescue fund, the European Financial Stability Facility (EFSF), may be "inadequate" if debt contagion spreads further.
Emerging economies may then need to be called in to help, Gordhan said.
But German Chancellor Angela Merkel fired back at Europe's critics on Friday, saying non-eurozone countries wanting rapid action should drop their opposition to a financial transaction tax.
"It is not possible that those outside the eurozone who are asking Europe to act are at the same time refusing a financial transaction tax," Merkel said in an allusion to, among others, the United States and Britain.
Merkel said the roots of Europe's current debt crisis went back "years, even decades" and, as a result, it "cannot be solved overnight."
"There's not one single solution, one big-bang plan of action that will solve everything," she said.
The urgency of the debt crisis -- which has threatened to spread from small economies like those of Greece, Portugal and Ireland to eurozone heavyweights like Italy -- was confirmed by Spain's downgrade.
Standard & Poor's cut Spain's long-term credit rating by one notch to "AA-" with a negative outlook on Thursday.
"The financial profile of the Spanish banking system will, in our opinion, weaken further," the ratings agency said citing the sector's "high level of private sector leverage, much of which is funded externally."
The Spanish downgrade took some of the gloss off Slovakia ratifying the expansion of the EFSF.
Slovakia gave Brussels a scare before becoming the last country in the 17-nation eurozone to agree to expand the bailout fund to 440 billion euros ($600 billion).
An initial rejection earlier this week brought down Slovakia's centre-right government and, in order to secure support to approve the EFSF in the second vote, it agreed to call early elections in March.
The new-look EFSF will be able to inject money into shaky banks or intervene instead of the European Central Bank to support weaker eurozone countries facing problems in raising fresh funds on the markets.
Amid US calls to further boost the fund's firepower, an EU source said the European Commission may "leverage" or increase the EFSF as much as fivefold to 2.5 trillion euros, without governments providing new guarantees.
The G20 ministers were to arrive in Paris through Friday and hold private or bilateral meetings, with the main talks to take place Saturday.
Following the finance meeting there will be an EU summit in Brussels from October 21 to 23, then the G20 leaders summit in Cannes on November 3 and 4, after which leaders hope a long-term plan will be in place.
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