European debt crisis shouldn’t be underestimated: IMF
NEW YORK: International Monetary Fund Managing Director Dominique Strauss-Kahn said the current European debt crisis shouldn't be underestimated and pledged to support member countries who seek help from the lender. The situation in Europe is "serious" and countries should decide for themselves if they require IMF support, Strauss-Kahn said in New Delhi today after meeting Indian Finance Minister Pranab Mukherjee.
"We shouldn't underestimate the importance of this crisis," said StraussKahn, 61. "When some members want some support, technical support, financial support, we are happy to do it. But we are not a commercial bank, we are not knocking at doors saying we should provide you some loans. Countries are sovereign and they decide if they want some external help or not."
Europe is in the throes of a sovereign debt crisis that spread from Greece to Ireland and threatens to engulf the entire euro-area. Speculation the debt crisis will spread to Portugal and Spain grew after an 85 billion-euro ($112 billion) aid package led by European Union governments and the IMF was authorized on Nov. 28 for Ireland.
Ireland became the second euro country to seek a rescue after the Greek debt crisis earlier this year destabilized the currency and forced the EU to set up a 750 billion-euro rescue fund backed by the IMF.
European nations need to restore confidence in their public finances, Strauss-Kahn said at a business conference in New Delhi today.
Borrowing costs for Europe's mostindebted nations have soared this week. The average yield for 10-year debt from Greece Ireland, Portugal, Spain and Italy reached a euro-era record. Standard & Poor's cut Ireland's debt rating two steps on Nov. 23. -PB News