IMF's Lipsky Won't Rule Out Further Bailout of Indebted European Countries
IMF First Deputy Managing Director John Lipsky
Tomohiro Ohsumi/Bloomberg
International Monetary Fund First Deputy Managing Director John Lipsky.
International Monetary Fund First Deputy Managing Director John Lipsky. Photographer: Tomohiro Ohsumi/Bloomberg
Jan. 28 (Bloomberg) -- International Monetary Fund First Deputy Managing Director John Lipsky talks about the European debt crisis and the risk of inflation in emerging economies. He speaks with Francine Lacqua on Bloomberg Television's "The Pulse" from the World Economic Forum meeting in Davos, Switzerland. (Source: Bloomberg)
International Monetary Fund First Deputy Managing Director John Lipsky said the organization may have to provide further financial aid to so-called peripheral European countries if the region’s debt crisis doesn’t ease.
“It certainly will depend on circumstances,” Lipsky said in an interview today with Bloomberg Television at the World Economic Forum in Davos, Switzerland, when asked if the IMF may have to provide assistance to more euro-area members. “Never say never.”
Lipsky said that the focus of euro-region countries that are currently “under market pressure” is to enact policy programs on their own. “If necessary, we stand by with our European partners to provide support,” he said.
The European Union and the IMF last year approved rescue packages for Ireland and Greece after concerns about mounting budget deficits pushed up bond yields and eroded confidence in the single currency. While most investors predict at least one nation will leave the euro area within five years, according to a Bloomberg Global Poll published on Jan. 26, Lipsky said the political will exists to make sure the euro survives.
“There are some strenuous programs that are already in place that if executed will diminish this risk and change these minds,” the IMF managing director said, referring to the survey’s results. “It creates the possibility of some positive surprises for investors because I think the political will and the economic possibility is there to make sure that the euro survives.”
As the World Economic Forum’s annual meeting got under way earlier this week, 59 percent of respondents in Bloomberg’s poll said one or more of the 17 euro nations will quit by 2016, including 11 percent who see an exit within 12 months. That sentiment is intensifying pressure on policy makers to strengthen their response to the region’s debt crisis.
To contact the reporters on this story: Francine Lacqua in Davos at flacqua@bloomberg.net; Scott Hamilton in London at shamilton8@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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