The International Monetary Fund said on Monday its role in helping the euro zone deal with its fiscal crisis has been clarified in the new European emergency fund to prevent Greece debt crisis from spreading.Just a few weeks ago, the IMF appeared sidelined as Greece's debt crisis mounted and EU leaders sparred over aid to Athens, which mismanaged its accounts for years.A day after the IMF approved a 30 billion euro rescue loan for Greece, part of a 110 billion euro EU-led aid package, the IMF's No. 2 official John Lipsky, said the IMF has demonstrated its usefulness in the euro zone crisis.European finance leaders agreed in the early hours of Monday after marathon talks to include the IMF in a new $750 billion euro ($1 billion) emergency fund to stave off the threat of a wider debt crisis contagion in the euro zone."In the face of great strains it has been clarified that the IMF has a central and key role in dealing with the policy challenges and potentially financial challenges of the eurozone," Lipsky told a small group of reporters."What has been clarified is that the euro zone is an integral part of the IMF and the IMF has an integral role in sustaining economic and financial stability in the euro zone and more broadly," said Lipsky, the IMF's first deputy managing director.Lipsky said it was "gratifying" to see positive financial market reaction, after a week of market turmoil, to the approval of funding for Greece and the new crisis fund.He said the EU fund resolved long-standing uncertainties about crisis responses and fiscal coordination in the euro zone.The package consists of a loan facility and loan guarantees as well as possible help from the IMF that could reach 250 billion euros."This is a potentially important measure of addressing the architectural ambiguity of monetary union, and in that sense, is an important step in strengthening that architecture," Lipsky added.While an EU statement said the IMF would make available 250 billion euros, Lipsky said the institution had not earmarked any money for euro zone countries and financial help would be provided on a case-by-case basis.The 250 billion euros cited by the EU was "illustrative" and a "hypothetical" figure of what the IMF could pony up if needed."We haven't made any blanket commitments," he said.As analysts try to piece together how such a crisis mechanism would work, Lipsky said Greece was a "template" for how the IMF could work alongside the EU to address crises.He said the IMF would not need to create new funding instruments to assist euro zone states, and any help would be provided at the request of member countries and determined by the specific circumstances of the country."Ultimately our participation is governed by the decisions of the executive board" of member countries, Lipsky said.He repeated the IMF was not currently in aid talk with Portugal, Spain or any other euro zone country on possible bailouts.He said reining in rising public debt in advanced economies, including the euro zone, would require substantial fiscal adjustments and sustained efforts by their governments.Lipsky said the IMF was about to begin its annual economic consultation with Spain and a separate one on the euro zone, but emphasized the reviews were already scheduled and had not come about due to the crisis.Consultations with Spain begin on Thursday, he said.Trying to allay fears that the IMF's resources may be stretched if it were to help out more European countries, Lipsky said the IMF had ample resources and had the ability to raise more funds if needed from its member countries."There are many ways in which our membershp can ensure our access to adequate funding," he said.(Reporting by Lesley Wroughton; editing by Carol Bishopric)News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment