Monday, November 29, 1999

IMF says no aid talks for Spain, bank tests welcome

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Spain has not asked to tap International Monetary Fund financing despite market pressures and its plans to publish the results of bank stress tests was a "very positive" step, a fund spokeswoman said on Thursday.Caroline Atkinson said there was no truth to media reports that Spain had requested IMF financial support to restore confidence in its economy."We have no request from any country ... for access to any kind of IMF facility and access to any kind of facility requires a request," she told a regular news briefing, adding in regards to Spain: "I can repeat with confidence that there is no truth to these rumours."Spanish news reports on Wednesday said the European Union, the IMF and U.S. Treasury were preparing a liquidity plan for Spain which includes a credit line of up to 250 billion euros ($335 billion). Speculation was further fuelled by a planned visit by IMF Managing Director Dominique Strauss-Kahn to Madrid on Friday.Atkinson said Spain had taken "decisive action" to address problems in its economy, including reining in its fiscal deficit."We are impressed by the deficit targets that they have announced, they seem fully appropriate; and they have taken serious steps with a upfront adjustment which is fully appropriate in the light of the pressures they have been facing," she said.Atkinson said Spanish labour market reforms, passed by the cabinet on Wednesday, was another part of ensuring long-term economic growth and would spur job creation and increase competitiveness.Spain and Germany, which had been sceptical about revealing details of tests on the financial health and risk exposure of its banks, said they would make public the results of stress tests on their banks to restore market confidence.Spain said it would publish the outcome of the tests shortly, to prove its banks are properly capitalized.Atkinson noted the IMF welcomed the move."Part of the issue always around the confidence of financial systems is uncertainty and we have learned that dispelling most of this uncertainty through publication of stress tests can be very helpful, so that is a welcome step," she added.
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