Friday 2 December 2016

US and IMF pile pressure on European leaders to solve crisis

DEBT CRISIS

Published 03/12/2011 | 05:00

THE US government and the International Monetary Fund (IMF) piled further pressure on European leaders to respond to the debt crisis last night.

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US Treasury Secretary Timothy Geithner announced a surprise whistle-stop tour of European capitals ahead of next Friday's key summit.

In Germany, he will meet ECB president Mario Draghi, Jens Weidmann, of the German central bank, and Finance Minister Wolfgang Schauble.

In France, he will hold talks with President Nicolas Sarkozy and Finance Minister Francois Baroin, as well as meeting Taoiseach Enda Kenny and others at a meeting of the European People's Party in Marseille.

He will then travel to Italy to meet the new prime minister, Mario Monti.

Meanwhile, the IMF's managing director, Christine Lagarde, said the global rescue fund was working behind the scenes to resolve the crisis.

Speaking on a tour of Brazil, Ms Lagarde signalled her support for a plan to funnel around €200bn of loans from European nations through the IMF as part of the eurozone rescue. The scheme was being pushed by European finance ministers earlier in the week.

"What we need to see is fiscal consolidation that is anchored, that is determined, that cannot be reversed," she said.

Growth

European countries are considering channelling more resources to the IMF. Under the plan, money could be loaned by the central banks of euro countries to the IMF, then used by the IMF to lend to countries at risk of being forced into bailouts -- such as Italy and Spain.

The idea was first proposed by Brazil, when it backed away from a request to pay into the European bailout funds directly. It would get around technical barriers that prevent central banks lending directly to states.

US President Barack Obama is understood to see the crisis in Europe as a major block on growth and a threat to his chances of re-election next year.

European leaders are seeking a definitive end to the crisis that is dragging down growth and threatening to undermine confidence in the euro.

Irish Independent

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