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November 28, 2011 at 08:41 AM
With yields on Italian bonds skyrocketing, a report in the Monday daily La Stampa that the International Monetary Fund would provide a loan package to Italy of up to 600 billion euros ($798 billion) at an interest rate of between 4-5% was denied by an IMF spokesperson. Japan also said that discussions were not under way within the G-7.
Although an IMF mission was expected in Rome within days, Bloomberg reported that the newspaper cited figures without attribution and the IMF denied the assertion via email. As of Nov. 17, according to the IMF’s website, the body has only about $390 billion available to lend. The paper also said that the IMF had several options to increase its firepower, including coordination with the European Central Bank.
Italy, with an economy far too large for a conventional bailout, is struggling to contain its debt crisis amid mounting market worries and despite statements by numerous officials that its basic economy is sound. At a forum in Tokyo on Monday, Bank of France Gov. Christian Noyer said that markets have forgotten Italy’s strengths, including its strong industrial base.
He added that eurozone bond markets “are not functioning normally.” Reuters reported him saying that Italy’s economy was fundamentally sound, and that Rome should be able to restore market confidence if it demonstrates fiscal discipline. He was quoted saying, “Italy should not be considered a weak economy.”
