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Emerging markets to Europe: Fix it!

Emerging markets like China and Brazil, as well as US, are urging European ministers to address its sovereign debt woes. But emerging markets, US lack consensus on solution.

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``It would be unjust to say that the G20 did not reach agreement on the euro zone crisis at this meeting, because that is not the point,'' said a source from G20 host France.

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Talks about the euro crisis are expected to spill over into the weekend's meetings of the IMF and the World Bank.


With Italy slapped with a debt downgrade on Monday and the IMF warning that Europe and the United States could slip back into recession, concerns over the immediate outlook for the global economy are likely to take precedence over longer-term goals on reducing trade imbalances.

The IMF on Tuesday warned Europe it needed to move fast.

``There is a wide perception that policymakers are one step behind markets,'' IMF chief economist Olivier Blanchard told reporters. ``Europe must get its act together,'' he added.

Some investors are anxious to see signs of fresh action by policymakers. ``I think it's going to necessitate some sort of action by the G20 this weekend,'' said Kathy Lien, director of currency research at GFT, shortly after Italy's downgrade.

The talks in Washington offer a forum to emerging markets to weigh in on the debate.

The so called BRICS group -- Brazil, Russia, India, China and South Africa -- will meet separately on Thursday to discuss possible options to limit fallout from the euro-zone crisis.

The United States has long urged China and other emerging nations to boost domestic demand and let their currencies rise to take up some of the slack in the global economy.

Brazil is expected to propose that it and other developing economies make new funds available to the IMF as a way to improve its firepower to ease the euro zone crisis.

But analysts expect little agreement on specifics among the emerging heavyweights.

``The BRICS in particular are likely to make a strong statement about how Europe needs to resolve its crisis soon because they fear the negative effects of more troubles from Europe,'' said Eswar Prasad, a former IMF official who is a professor at Cornell University.

``I suspect they are unwilling to put up any serious money for this,'' he said.

The Washington talks come about three weeks ahead of another G20 ministerial meeting in Paris. It will aim to finalize details on a deal to reduce global trade and financial imbalances ahead of a G2O leaders summit in November.