The G-20 nations are conditioning additional money for the International Monetary Fund on the European Union first increasing its financial stabilization funds to ease concerns about the euro zone debt crisis, officials said Sunday.

Officials participating in a meeting of G-20 nations’ finance ministers and central bank heads said an EU decision to add to the estimated 500 billion euro ($675 million) in firewall funds already committed to the effort would be essential before the rest of world considers contributing to the stabilization measures.

“There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and that the IMF cannot move forward without more clarity on Europe’s own plans,” U.S. Treasury Secretary Timothy Geithner said following the close of the meeting, noting the U.S. would not be making any increased contribution.

The weekend talks mainly focused on stability for the euro zone, where debt and economic problems have threatened to destabilize global financial markets.

Though no specific amount in firewall funds was discussed, Geithner said the funds “have to be large ... my sense is that they (Europeans) understand that.” Other officials said the added funds must be enough to calm market concerns and should be available to countries before they fully carry out promised fiscal reforms.

While the United States, Brazil and the Organization for Economic Cooperation and Development had already publicly urged an increase, a senior G-20 official who spoke on condition she not be quoted by name said the consensus that the EU must act was much broader, including big potential lender countries like China and Japan. They feel the IMF can play a back-up role, but the EU’s own fund must be the first line of defense, the official said.

It appears Germany’s reluctance to further fund EU stabilization funds may be the sticking point, largely because the issue is a sensitive one in German domestic politics. Germany is the EU’s strongest economy and would probably be the biggest contributor, and the German parliament must still approve the current round of support efforts for debt-plagued Greece.

At a news conference, Mexican Treasury Secretary Jose Antonio Meade noted the euro-zone countries are to assess their stabilization efforts at a March meeting and said the results of that assessment, and possible changes in the size of the firewall funds, would “be fundamental” to how G-20 nations decide on increasing funding for the IMF.

Mexico’s central bank head, Agustin Carstens, said the EU decision would be an “essential input” for IMF funding decisions.

Geithner noted that “the G-20 is committed to making sure that the IMF has the resources it needs to help its members deal with the risks from Europe.”

He also called the appreciation of China’s currency, the renminbi, “welcome progress.” China’s currency has risen about 12 percent in real terms against the U.S. dollar over the last 18 months. But Geithner said that “we believe it is in China’s interest and in the interest of the global economy for their exchange rate to continue to appreciate.”

Geithner also said he had “a series of encouraging conversations with countries planning to significantly reduce imports from Iran,” to reinforce sanctions aimed at discouraging Iran’s nuclear program.

“We are seeing very effective cooperation from our partners on the financial front to help ensure that their banks cease transactions with the Central Bank of Iran and that Iranian banks find it harder than ever to facilitate Iran’s illicit nuclear activities or to help Iran evade sanctions,” he said at a new conference.

Turning to the U.S. economy, Geithner said, “this is an important year for financial reform in the United States, where we expect to have the major foundations of our reform in place by the end of 2012.”

While noting that the U.S. has made progress in some sectors on economic recovery, “even with this progress, however, the damage inflicted by the crisis will still take some time to repair. Unemployment, while falling, is still very high. And the housing market remains weak.”

German officials did not speak to the media following the conference but appear reluctant to increase stabilization funds.

In a column in the Mexican newspaper El Universal on the eve of the meeting, German Finance Minister Wolfgang Schauble wrote that “should we increase even more the firewalls? The response is a resounding no.” Schauble also rejected sharing other euro-zone country debts or expanding the euro money supply to meet countries’ budget gaps.

“This would not only not solve the problems of debt and competitiveness that brought the affected countries to their current state of affairs, it would also discourage their governments from carrying out consolidation and reform,” he wrote.

German central bank president Jens Weidmann noted Friday that euro-zone political leaders discuss further increases for the EU’s firewall fund in their March meeting, but while he didn’t rule out increased funding, he said money alone won’t do it.

“Higher walls of money can buy time, but that time must be used to tackle the roots of the crisis,” Weidmann said at a seminar prior to the ministers meeting.

“Ultimately, Greece cannot be forced to comply with the program,” he said of the indebted country’s commitment to make fiscal, wage and other changes in exchange for the EU bailout. “But it should be clear that no further disbursements will be warranted if Greece fails to keep its side of the bargain.” (AP)