The International Monetary Fund said it is not preparing financial aid for Spain and the country denied any talks about a bailout even as its borrowing costs approach euro-era records.
“There’s been no request for financial assistance from Spain and the IMF is not making plans for financial assistance to Spain,” Gerry Rice, the IMF’s director of external relations, told reporters in Washington today.
Spain, which this month nationalized Bankia group, the country’s third-largest bank, is trying to shore up lenders and help cash-strapped regions as its own 10-year bond yields approach the 7 percent level that prompted bailouts in Greece, Ireland and Portugal.
It is “senseless” to say Spain is talking to the IMF, Spanish Economy Minister Luis de Guindos said during a conference in Sitges, near Barcelona, after the Wall Street Journal reported that the IMF’s European department started contingency plans for a rescue loan to Spain should the country fail to find funds to bail out Bankia.
“The IMF’s spokesman today said no bailout is contemplated for Spain. I have nothing to add further than refer to his comment,” Carmen Martinez Castro, deputy minister for communication, said in a telephone interview.
IMF Managing Director Christine Lagarde will meet Spanish Deputy Prime Minister Soraya Saenz de Santamaria later today to discuss “recent economic developments in Spain,” Rice said. An IMF team will start its annual assessment of the country’s economy on June 4.
Asked to comment on the Wall Street Journal report, another IMF spokesman, who did not want to be identified, said the body always has contingency plans. Part of the job is to be prepared for any eventuality, he said. The IMF is always discussing scenarios with all member countries, the spokesman said.
Rice reiterated the IMF’s recommendations for strengthening crisis-fighting tools in the euro region, including increased risk-sharing mechanisms, a single bank-resolution authority and a single deposit-insurance fund.
Regarding Greece, Rice said the country can overcome its own crisis if “all players fulfill their responsibilities and the right policies are implemented.”
The IMF doesn’t plan to send a team to Greece until a government is formed after the June 17 election, Rice said. Any discussions about conditions attached to the current bailout, which is financed by the IMF and euro nations, wouldn’t change the objectives of the program, he said.
Lagarde told the IMF board of directors that she regrets that her comments about Greek taxpayers in an interview to the Guardian newspaper “were misunderstood and caused offense,” which was “not her intention,” according to Rice.
In the interview, Lagarde said that children in Africa needed more help than the Greeks and that many in the country were “trying to escape tax all the time.”
She later said on her Facebook page that she was sensitive to the plight facing Greece, while reiterating that the wealthy must pay their fair share of taxes, generating more than 36,000 comments from across Europe.