Race against clock as EU faces IMF bailout deadline

European Union finance ministers raced against the clock on Monday to meet a self-imposed deadline to raise 200 billion euros ($260 billion) for new eurozone bailout funding. The target figure and a 10-day deadline to deliver the cash pledges to the IMF was decided by EU leaders in the early hours of a December 9 summit and effectively expires at midnight (2300 GMT). International credit rating giants such as Fitch, which warned on Friday it might soon downgrade six countries, including Italy and Spain, are watching EU efforts closely. At the same time as those talks get under way from 4:00 pm (1500 GMT), European Central Bank (ECB) chief Mario Draghi will go before the European Parliament's economics committee -- fresh from an interview in the Financial Times in which he warned the central bank alone could not resolve all the eurozone's ills. Asked if the ECB could step in and act as a US-style lender of last resort, Draghi put the onus back on European governments by saying: "The important thing is to restore the trust of the people -- citizens as well as investors -- in our continent. "We won't achieve that by destroying the credibility of the ECB." At the summit, 26 of the 27 EU leaders agreed to implement a new "fiscal compact" as sought by Draghi, one that would make achieving balanced budgets a legally enforceable goal. The ministers will begin discussing a first draft of how that might fit into the EU's existing legislative framework, as well as when to stump up government guarantees for a permanent bailout fund, the European Stability Mechanism (ESM) that is due to start work next year. First, though, in their latest bid to tackle the present crisis as opposed to making changes to prevent future repeats, they also decided to tap into IMF credibility in a bid to attract vital support from other global economies who want a stabilised eurozone to fend off the threat of recession in 2012. Only Russia even tentatively, and with conditions, has suggested it could contribute up to $20 billion in loans and investments. China, India and Brazil have yet to go that far. The EU leaders decided to change track followed months of struggling to increase the lending capacity of their stretched eurozone bailout fund, the 440-billion-euro European Financial Stability Facility (EFSF). The 200 billion euros are to be pledged in the form of individual loans from eurozone and wider EU central banks. Said French budget minister Valerie Pecresse on Monday: "Only the IMF has the competence to put public finances back on solid footings." But problems are mounting over the fund raising effort. European Commission economy spokesman Olivier Bailly nuanced the countdown, saying it was a question of a "political deadline, not a legal deadline." At the summit, Britain refused to back changing the EU's treaty, the new fiscal pact or the latest bailout contribution. On Friday, a spokesman for Prime Minister David Cameron underlined: We made very clear in that meeting that we were not contributing to that 200 billion euros." The proportion put up by other European countries "will have to be modified given that Britain won't participate," said an Italian government source. Hungary, itself in financial difficulty, is also demanding an exemption, Germany would be due to stump up the lion's share, but it too has hurdles and conditions. Central bank governor Jens Weidmann said that a quota of up to 45 billion euros is available, provided there is "fair" burden-sharing among IMF members. But "if large members, for example the US, were to say 'we're not taking part,' then from our point of view it is problematic," he said last week. Meanwhile incoming Spanish prime minister Mariano Rajoy acknowledged the country may miss its deficit target of 6.0 percent of GDP this year, and announced 16.5 billion euros of cuts. Speaking in Nigeria on Monday, IMF chief Christine Lagarde said the European debt crisis poses a risk for "all economies of the world." London-based eurosceptic think tank OpenEurope on Monday estimated that ECB exposure to weaker eurozone economies now tallies "705 billion euros, up from 444 billion in early summer -- an increase of over 50 percent in only six months."