IMF welcomes efforts by EU countries to address crisis

THE International Monetary Fund welcomed measures announced by the European Central Bank and European governments to address the region’s debt crisis.

European authorities have managed “to come up with measures and proposals to address the problem collectively as well as in a number of countries,” IMF director of external relations Caroline Atkinson said at a press briefing in Washington yesterday. “Countries facing market pressure have also taken steps which we applaud.”

Ms Atkinson said it was “important” that European Central Bank (ECB) president Jean-Claude Trichet had “emphasised the importance of doing what was necessary to preserve financial stability in the eurozone, and the statement and actions today confirmed the ECB is ready to take steps as necessary.”

The central bank’s meeting yesterday in Frankfurt took place under pressure from investors to prevent the debt turmoil from engulfing Spain, the euro area’s fourth largest economy, after the Irish rescue failed to persuade markets that policymakers have the resolve needed to contain it.

IMF managing director Dominique Strauss-Kahn earlier yesterday in Delhi told reporters that after Greece and Ireland, which received bailouts while “at the edge of the cliff”, some other countries in Europe are “not far from the edge of the cliff.” The whole euro region “has now to deal with medium-term fiscal consolidation,” he said, adding he expects the crisis to be controlled.

Since an international bailout for Ireland November 28, the IMF has not received any request for help from other countries, Atkinson said. The fund is in “a strong financial position to address our members’ needs,” she said, when asked about resources for potential loans.

Strauss-Kahn will be in Europe next week, attending a meeting of finance ministers from the euro region on December 6, Ms Atkinson said. He will then head to Greece, the recipient of a €110-billion bailout from the European Union and the IMF, for a December 7 visit to meet with officials, she said.

The IMF would be willing to consider extending the maturity of future disbursements on a Greek loan, though it wouldn’t be decided before next year, she also said.