Euro­pean debt cri­sis shouldn’t be un­der­es­ti­mated: IMF

The Pak Banker - - Front Page -

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

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