Open

Coming up

Don't miss

Replay


LATEST SHOWS

FOCUS

Video: Milan is starting point for Syrian refugees’ European odyssey

Read more

WEB NEWS

Russian aid convoy: Mission accomplished?

Read more

WEB NEWS

Actor Orlando Jones lauches 'Bullet Bucket Challenge'

Read more

IN THE PAPERS

'Macron Economics'

Read more

BUSINESS DAILY

Macron-economics, the former banker turned minister

Read more

IN THE PAPERS

'The capital of sex, drugs, alcohol, trash and trashy tourism'

Read more

MEDIAWATCH

French government crisis: 'Krankreich' not Frankreich

Read more

DEBATE

Hollande's Last Chance: Can Weakened President Reform Without Left Flank? (part 2)

Read more

DEBATE

Hollande's Last Chance: Can Weakened President Reform Without Left Flank?

Read more

  • Video: Milan is starting point for Syrian refugees’ European odyssey

    Read more

  • France’s Hollande puts young ex-banker in top economy post

    Read more

  • Video: Iraq’s Yazidis flee to spiritual capital of Lalish

    Read more

  • Airstrikes and Assad - Obama’s military conundrum in Syria

    Read more

  • IMF’s Lagarde put under formal investigation in French corruption case

    Read more

  • American journalist held captive in Syria arrives in US

    Read more

  • In pictures: France’s new ministers

    Read more

  • 'Lasting' ceasefire agreed for Gaza, Abbas says

    Read more

  • Far-right ‘Russian Jihad’ fighters cross into Ukraine

    Read more

  • American 'Islamic State fighter' killed in Syria

    Read more

  • The ‘war’ at the heart of France’s ruling party

    Read more

  • Burger King to buy Canada's Tim Hortons for $11 billion

    Read more

  • Rebels 'shoot down' UN helicopter in South Sudan

    Read more

  • Air France pilots threaten September strike

    Read more

  • WHO seeks stricter regulation for e-cigarettes

    Read more

  • World’s ’most expensive’ apartment to go on sale in Monaco

    Read more

Business

IMF creates new loan programme to ward off debt crisis

Text by News Wires

Latest update : 2011-11-23

The International Monetary Fund has announced a new lending facility aimed at helping countries with strong fundamentals protect themselves from contagion in the event of financial crises. The tool should ease the pressure on bonds markets.

AFP - The International Monetary Fund on Tuesday announced a new lending facility aimed at helping "bystander" countries protect themselves from contagion during financial crises.

The announcement of the facility, first proposed earlier this year, came as Italy and Spain fight to protect their finances while under severe pressure in bond markets already spooked by fiscal crises in Greece, Portugal and Ireland.

The new tool will be used to aid countries with "relatively strong policies and fundamentals" but whose economies are endangered "during periods of heightened economic or market stress," the IMF said.

It allows a country with an actual or potential balance of payments problem to seek immediate aid that can be worth up to five times the value of the country's IMF quota, or permanent contribution, over six months.

While no official mention of potential borrowers was made, the program appeared designed for countries like Italy and Spain, which have massive debt burdens but reasonably sustainable fiscal imbalances in the short term.

In recent weeks, both have faced quickly rising borrowing costs on international debt markets that threaten efforts to get their government finances in order.

Based on its IMF quota, Rome could potentially tap the new IMF fund for some 45.5 billion euros ($61.5 billion), while Spain could get 23.3 billion euros ($31.5 billion) over six months.

"The reform enhances the Fund's ability to provide financing for crisis prevention and resolution," said IMF managing director Christine Lagarde.

"This is another step toward creating an effective global financial safety net to deal with increased global interconnectedness."

The announcement gave a boost to the euro, which shot up from about $1.3500 to $1.3540 in the minutes following, before paring some of those gains down to about $1.3520 at 1800 GMT.

The Fund meanwhile said it was consolidating two other emergency aid facilities into the new Rapid Financing Instrument to support countries facing financing stresses during and after conflicts, natural disasters or emergency situations.

A Fund official said the change, which broadens the coverage of the previous facilities, arose in the wake of the uprisings earlier this year in northern Africa and the Middle East.

Date created : 2011-11-23

  • PORTUGAL

    EU and IMF endorse Portugal’s next aid payment

    Read more

  • GLOBAL ECONOMY

    IMF’s Lagarde warns of decade lost to financial crisis

    Read more

  • ECONOMY

    EU looks to bolster crisis fund as IMF pledges action

    Read more

COMMENT(S)