Saturday

10th Dec 2016

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

EU public lacks voice on banking laws

The complexity of financial laws and lack of NGO resources means the “man in the street” has little say on EU banking regulation, the EU Commission has warned.

News in Brief

  1. Council of Europe critical of Turkey emergency laws
  2. Italian opposition presses for anti-euro referendum
  3. Danish MP wants warning shots fired to deter migrants
  4. Defected Turkish officers to remain in Greece
  5. Most child asylum seekers are adults, says Denmark
  6. No school for children of 'illegal' migrants, says Le Pen
  7. Ombudsman slams EU Commission on tobacco lobbying
  8. McDonald's moves fiscal HQ to UK following tax probe

Stakeholders' Highlights

  1. Swedish EnterprisesHow to Use Bioenergy Coming From Forests in a Sustainable Way?
  2. Counter BalanceReport Reveals Corrupt but Legal Practices in Development Finance
  3. Swedish EnterprisesMEPs and Business Representatives Debated on the Future of the EU at the Winter Mingle
  4. ACCASets Out Fifty Key Factors in the Public Sector Accountants Need to Prepare for
  5. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  6. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  7. CESICongress Re-elects Klaus Heeger & Romain Wolff as Secretary General & President
  8. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  9. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  10. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  11. ECR GroupRestoring Trust and Confidence in the European Parliament
  12. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First