The countdown has begun. Last week Antonio Borges, director of the European department of the International Monetary Fund (IMF), picked a fight and then backed down when suggesting a possible purchase of Spanish and Italian debt. That he did so was denied quickly, and now the IMF is reiterating its preoccupation with the stigma that is flooding the two biggest economies in peripheral Europe.
In a new attempt to fortify Spain and Italy in anticipation of a more than likely collapse in Greece, the IMF is preparing new lines of near-term credit to impede a global contagion of the sovereign debt crisis that the Old Continent fears.
According to the Wall Street Journal, the IMF met this past Saturday with French president Nicolas Sarkozy to prepare an 'express aid' package of 112 billion euros that will support struggling countries such as Spain and Italy, as well as healthy economies (e.g., South Korea's) that could suffer from volatility that waylays the financial markets.
"We have nothing to add," explained Will Murray, a spokesperson for the IMF. That said, plans are not concrete yet and we will have to wait until the G-20 summit held in Cannes in November in order to flesh out details and conditions and guarantee that government leaders will back the aid packages.
Moncloa denies it
For its part, the Spanish government openly rejected that international aid is destined to save its economy and that they have asked for foreign aid. "There is nothing going on. Nothing is being considered," assured sources from Moncloa, who insists that liquidity shortages in Spain are limited to the banking sector and not affecting the public administration.
