Saturday

24th Feb 2018

IMF said to be readying Italian bail-out

  • Lagarde (c) - the Washington-based lender is readying a bail-out for Italy, according to reports (Photo: IMF)

The International Monetary Fund (IMF) is preparing a multi-billion-euro rescue of Italy, reports in the Italian media on Sunday (27 November) claim.

The Washington-based lender is in talks readying a €600 billion assistance package for Rome in return for swingeing austerity and structural adjustment measures, according to an article in Italian daily La Stampa, quoting unnamed officials in the American capital.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Spain meanwhile may not need a full bail-out programme and be offered instead a credit line.

Buttressing speculation that the IMF is set to bail out the eurozone’s third biggest economy, ECB member and Bank of France governor Christian Noyer was asked directly by reporters whether the IMF is preparing a programme of support for Italy, but he refused to comment.

"Italy should not be considered a weak economy," he said, speaking in Tokyo. "A breakup of the euro zone is out of the question. There is no plan B."

However, an IMF spokesperson has since denied the reports: "There are no discussions with the Italian authorities on a programme for IMF financing."

According to the Italian newspaper, a range of options is being considered, although the core of the plan would be for the IMF to provide funding to Rome at rates of between four and five percent, considerably lower than the seven percent rates forced upon Italian government borrowing in recent days.

The eurozone's own bail-out fund, the European Financial Stability Facility, can only provide loan guarantees of up to €440 billion, and some €230 billion of that sum has already been spoken for by Greece's rescue package.

On Friday, the office of the Italian prime minister put out a statement saying that at a summit of the Franco-German eurozone powerhouse duo where Italy was invited for the first time, French President Nicolas Sarkozy and German Chancellor Angela Merkel had warned: “A collapse of Italy would inevitably be the end of the euro.”

Underscoring Rome’s precarious situation, Italian banks have issued an appeal to citizens’ patriotism, calling on regular savers to fill the gap left by the market and purchase government bods.

Following an Italian Banking Association scheme, on Monday, banks will waive commission fees for customers who purchase bonds. A similar effort will be mounted on 12 December.

The country’s highest-paid footballers have joined in the appeal, with their union of multi-millionaires saying that they too will be purchasing the government’s debt.

Separately on Monday, US credit rating agency Moody’s warned that all EU sovereign credit ratings were threatened by the worsening crisis.

"The continued rapid escalation of the euro area sovereign and banking credit crisis is threatening the credit standing of all European sovereigns," the firm said in a new assessment.

Meanwhile, Britain’s Sunday Telegraph has reported that UK embassies are drawing up contingency plans to help British citizens travelling in the eurozone in the event of a collapse of the euro and possible social unrest.

Italian bonds shatter 7% bail-out ceiling

The interest rate on Italian 10-year government bonds breached seven percent on Wednesday, shattering the psychological bail-out ‘ceiling’. Greece, Portugal and Ireland all had to seek multi-billion-euro bail-outs when their 10-year bonds exceeded this threshold.

Report: Italy to be put under IMF surveillance

Reuters reports that Italy has agreed to be put under surveillance by the International Monetary Fund (IMF) as part of a plan to restore market trust in the eurozone's third-largest economy.

Spanish borrowing costs soar

Eurozone woes deepened Thursday as Spain and France were forced to pay sharply higher interest rates than usual and anti-austerity protesters in Italy and Greece clashed with police.

Minister breaks down announcing new Italian austerity

The government of ex-EU-commissioner Mario Monti has outlined the key points of an emergency €20 billion austerity programme, adopted on Sunday, a day ahead of schedule under pressure from markets.

EU looking to new €940bn bail-out fund

The EU's troubled bail-out fund, the EFSF, could have its lending capacity more than doubled to €940 billion to reassure markets that Italian and Spanish debt is safe.

Desperate eurozone chiefs look to IMF

With little interest materialising in the private sector to boost the eurozone's rescue fund, the region may ultimately be forced to turn to the IMF, eurozone finance ministers conceded on Tuesday.

Opinion

Greek government's steady steps to exit bailout programme

Growth predictions are positive, exports increasing, unemployment dropping and credit-ratings up, says the head of Greece's Syriza delegation to the European Parliament. Now the government in Athens is looking to design its own reform programme.

Analysis

We are not (yet) one people

Talks on the next EU budget will start on Friday. Brussels wants to do much more than before – and needs a lot more money. But arguing about funds won't be enough.

News in Brief

  1. EU calls for immediate ceasefire in Syria
  2. UK's post-Brexit vision is 'pure illusion', Tusk says
  3. EU leaders express solidarity with Cyprus in Turkey drill row
  4. EU to double funding for Sahel forces
  5. EU parliament president: 'The immigration problem is Africa'
  6. May to unveil EU departure strategy next week
  7. Pregnant workers may be dismissed, EU court rules
  8. Romanian minister demands anti-corruption prosecutor fired

Stakeholders' Highlights

  1. ILGA EuropeAnkara Ban on LGBTI Events Continues as Turkish Courts Reject NGO Appeals
  2. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  3. Macedonian Human Rights Movement Int.European Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  4. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  5. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  6. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  7. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  8. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name

Latest News

  1. EU agrees budget to focus on defence, security and migration
  2. EU leaders nix transnational lists, cool on 'Spitzenkandidat'
  3. Regions chief: calls for smaller EU budget are 'impossible'
  4. Election fever picks up This WEEK
  5. EU-Morocco fishing deal casts doubt on EU future foreign policy
  6. EU leaders put 'Spitzenkandidat' on summit menu
  7. European far-right political party risks collapse
  8. The key budget issues on EU leaders' table