IMF drawing up £500bn package to save Italy, Spain and the euro

The International Monetary Fund is being lined up potentially to help Italy   and Spain amid growing fears that a European rescue scheme will not be able   to prop up the countries.

Reports in Italy suggested that the IMF is drawing up plans for a €600 billion   (£517 billion) assistance package for the country. Spain may be offered   access to IMF credit, rather than a rescue package, to avoid it being   “picked off” by the markets in the coming weeks.

Any IMF involvement in European rescue packages would be partly underwritten   by British taxpayers, which could leave this country liable if Italy and   Spain did not repay any international loan.

Britain provides 4.5 per cent of the IMF’s funding and would, therefore, face   a potential liability to an Italian package of up to €27 billion (£23   billion).

An IMF rescue package involves a country being offered hundreds of billions of   euros in return for agreeing to launch a major austerity programme to cut   spending. A credit line is a more flexible arrangement which gives countries   short term access to international finance.

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Categories: Europe, Italy

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