A team of experts from the International Monetary Fund will arrive in Madrid next week to meet with the Bank of Spain. The IMF will attempt to strengthen the Financial Sector Assessment Program (FSAP) and provide Spain with some lines of credit that it can add to other credit made available to Spain and Italy. Because they have to issue money, it is not strange that the countries will have to pass muster before the supervisor of the Spanish banking system, which has been questioned thoroughly during this crisis.
We know that several weeks ago IMF leadership proposed an idea to install an external auditor for our banking system. The auditors would come in and examine numbers and determine how much money is really lacking at this point. It is very likely that the IMF will allocate resources to Spain that are destined to recapitalize lenders.
The possible re-collapse of our economy and real estate market awakes many doubts about the financial sector. Given unemployment figures and a serious real estate bubble, many analysts are skeptical of the exact numbers. They think that on the one hand, many default payments are being brushed under the rug because of refinancing and capital shortages.
On the other hand, predictions of 15% or 20% ought to be added to the already established 30%. Bank of Spain governor Fernández Ordoñez has colluded with the federal government and, as a consequence, has already delayed reforms enough and has not imposed a cleanup. Now they are coming to ask for money in order to maintain national stability.
