Flaherty singled out Iceland, which has had to nationalize its three banks, saying he wouldn't be "surprised" if it needed emergency assistance from the International Monetary Fund. He also said other countries are likely to need support.

"The IMF has an important role to play now, more important than in times of significant world economic growth," he told Bloomberg News in an interview.

"In their loan portfolio, I expect that there will be significant demands on the IMF in the coming months," he was quoted as saying.

Flaherty said he was pleased with the "historic" meetings. He said it was focused on solutions and implementing a principle-based plan rather than laying blame.

"The approach that the U.S. has been taking here is to acknowledge what happened, and not to avoid taking responsibility for the subprime crisis. That's been healthy in terms of moving on to constructive discussions, the five-point plan moving forward, rather than dwelling on how did we get to this unpleasant place."

Flaherty was scheduled to meet with ministers from Latin America and the G20. He said he was expecting to hear some "clearly expressed" concerns about how the crisis stemmed from the United States.

"My hope is that we'll all end up on the same page in terms of the five-point action plan of the G7," he said.

On the domestic front, Flaherty said that although the crisis has grown "more protracted and severe", Canadian banks are "solid" and there is no need to increase deposit insurance in Canada. He said there was a consensus in the G7 meetings that major banks cannot be allowed to fail.

The finance minister also said he is "pleased" that Canadian banks cut lending rates in line with the Bank of Canada after originally only lowering them by 25 basis points.

In an interview with CBC, Flaherty said the government "should run a surplus" if re-elected in Tuesday's election. Flaherty was asked if the government's recently unveiled $25 billion program to buy mortgages from banks will cost taxpayers. He replied that it won't threaten the country's surplus and that it could make a small profit. He also said the government has been considering the program "for months."

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.