October 5, 2011
The International Monetary Fund on Wednesday indicated it was prepared to dramatically step up measures to help Europe combat the debt crisis, which threatens to spread to the Continent's banks. But the euro zone, the IMF said, needs to change its strategy.
With the Greek economy failing to recover to the degree expected, plenty of officials and analysts this week have fretted about whether efforts currently in place to prop up the country will be sufficient. On Wednesday, the International Monetary Fund joined the chorus, offering to vastly increase its role in helping the euro zone put the brakes on the accelerating debt crisis.
Speaking at a press conference in Brussels on Wednesday, Antonio Borges, head of the IMF's Europe program, said that the euro bailout fund, the European Financial Stability Facility (EFSF) needed to be significantly strengthened to prevent contagion from spreading to Italy and Spain. He also said that the second bailout package for Greece, a €109-billion fund agreed to by euro-zone countries in July, was far too small.
But Borges also indicated that the IMF was prepared to change its role in ongoing efforts to get Europe's debt crisis under control. The IMF, he said, could step in to bond markets to help prevent Spain and Italy from succumbing to the crisis.
"We have a whole set of options that could be put on the table to restore confidence in those countries," Borges said.
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