In­ter­na­tional Mon­e­tary Fund lam­basts in­con­clu­sive euro talks

The Pak Banker - - Company& -

BRUS­SELS: The head of the IMF crit­i­cised the EU's piece­meal ap­proach to res­cu­ing the euro cur­rency from con­ta­gion as min­is­te­rial talks in Brus­sels gave no suc­cour to coun­tries with wors­en­ing sov­er­eign debt prob­lems.

At a sum­mit in Oc­to­ber, France and Ger­many pro­posed set­ting up a per­ma­nent sys­tem to han­dle crises in the euro zone, ad­mit­ting it would mean chang­ing the EU Treaties.

Ger­many expressed a wish for in­vestors to share losses in the event of debt re­struc­tur­ing.

Op­po­nents fear this will cause fur­ther eco­nomic strife ac­cross the euro zone as in­vestors shun Ir­ish, Por­tuguese and Span­ish bonds, push­ing their yields to record highs.

Min­is­ters are cur­rently dis­cussing whether bond­holder "hair­cuts" should form part of a per­ma­nent loan fa­cil­ity.

Many an­a­lysts be­lieve Por­tu­gal will fol­low Ire­land in seek­ing fi­nan­cial as­sis­tance from the Euro­pean res­cue fund, and there are fears that Spain might be forced to fol­low suit.

Sep­a­rately, Euro­pean Cen­tral Bank Gov­ern­ing Coun­cil mem­ber Axel We­ber said he be­lieved eu­ro­zone states could come up with more money if the ex­ist­ing 750-bil­lion-euro EU-IMF safety net ever were to prove in­suf­fi­cient.

IMF Man­ag­ing Di­rec­tor Do­minique Strauss-Kahn failed to per­suade fi­nance min­is­ters from the 16-nation sin­gle cur­rency area on Mon­day to in­crease the size of their 750bn fi­nan­cial safety net or the Euro­pean Cen­tral Bank to step up govern­ment bond pur­chases. "The euro zone has to pro­vide a com­pre­hen­sive so­lu­tion to this prob­lem. The piece­meal ap­proach is not a good one," StraussKahn said.

Yes­ter­day's min­is­te­rial talks on buf­fet­ing the euro zone against a wors­en­ing sov­er­eign debt cri­sis will spill into to­mor­row and next week, as coun­tries pre­pare a sum­mit to res­cue the euro.

To­day di­plo­mats from the 27-mem­ber states are meet­ing to take stock of yes­ter­day's talks to res­cue the euro and pave the way for dis­cus­sions next week on a per­ma­nent EU loan fa­cil­ity to be up and run­ning by 2013. In the wake of more pos­si­ble EU bailouts in Por­tu­gal and Spain, EU lead­ers will be meet­ing in Brus­sels again on 16 and 17 De­cem­ber to lay down plans for an EU loan fa­cil­ity to set in stone bailouts such as the ones that were granted to Greece and Ire­land. Yes­ter­day's meet­ing also saw a re­vival of dis­cus­sions on eu­robonds af­ter the head of the Eurogroup, JeanClaude Juncker, and Ital­ian Fi­nance Min­is­ter Gi­ulio Tre­monti called on lead­ers to in­tro­duce com­mon bonds to shield the trou­bled cur­rency from spec­u­la­tors. Ger­man Fi­nance Min­is­ter Wolf­gang Schäu­ble la­belled talk of eu­robonds " off-tar­get and un­nec­es­sary". Though Schäu­ble did not shun out­right the idea of EU coun­tries go­ing to the mar­ket to­gether, he in­sisted that dif­fer­ing in­ter­est rates on govern­ment bor­row­ing were a way of im­pos­ing fis­cal dis­ci­pline. -PB News

IS­LAM­ABAD: Pres­i­dent AJK Raja Zulqar­nain Haider called on Fed­eral Min­is­ter for Kash­mir Af­fairs, Gil­git-Baltistan Mian Man­zoor Ah­mad Wat­too at his res­i­dence. -On­line

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