Italy, Spain Haven’t Asked For IMF Aid. Yet.

By: EW News Desk Team   Date: 29 November 2011

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EW News Desk Team

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29 November 2011

The International Monetary Fund has yet to receive any funding requests from either Italy or Spain to avert their deepening debt crisis, said IMF Managing Director Christine Lagarde on Monday, after earlier reports suggested that the global economic organisation had been preparing a $794 billion bailout plan for Italy.

Related: IMF Preparing $794 Billion Bailout For Italy

Lagarde said that the IMF could only give loans to governments that had explicitly asked for them, while adding that financial help had thus far been extended only to Portugal, Ireland and Greece.

"At this point in time the IMF has not received any request for assistance from, nor are we negotiating with, either Italy or Spain," said Lagarde, as quoted by Reuters, after a meeting with Peruvian President Ollanta Humala.

The IMF, though, "have offered our assistance for fiscal monitoring in Italy," she added.

An IMF inspection team is expected in Rome over the coming days, as part of a special surveillance mechanism that had been agreed upon during the G-20 summit earlier this month. Earlier this week, Italian newspaper La Stampa claimed that the IMF were set to provide Italy with up to 600 billion euros ($794 billion) of financial aid at a rate of between 4-5 percent, giving Italy 18 months to sort its finances out.

Analysts say that the IMF may be looking to emerging markets to help increase the size of its credit lines as the debt crisis in Europe continues to grow. After her trip to Peru, Lagarde will be visiting other Latin American economies, such as Brazil and Mexico, this week to drum up support for more global cooperation.

"As far as the European situation is concerned, clearly we see the need for a comprehensive, rapid set of proposals that can form a comprehensive solution, and the IMF can be part of that," said Lagarde, who also stressed the need for a coordinated global effort to combat the festering economic crisis.

Related: Divided We Fail – The World Needs Quick And Collective Action: Christine Lagarde

Related: Times of Trouble: Can Christine Lagarde Lead the IMF Through its Toughest Period?

Related: The Long and Winding Road to Recovery

Global markets rallied on Monday after rumours had emerged of a supposed IMF intervention in Italy. Japan's Nikkei Stock Average was 1.8 percent higher, with Australia's S&P/ASX 200 rising by 1.9, while Dow Jones Industrial Average futures were up 157 points in screen trade.

Analysts though have been doubtful over whether an IMF bailout of Italy would have end the euro-zone's debt problems.

“Although the IMF loan idea, if it be can implemented, would provide temporary relief to the beleaguered euro zone credit markets, it will not solve the long-term financing problems facing the region,” said Boris Schlossberg, a New York-based FX 360 director of currency research, to the Sydney Morning Herald.

“Whether the early investor enthusiasm to the weekend news will sustain itself through the European open remains to be seen.”


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