IMF head says Madrid trip a 'working visit'

16th June 2010, Comments 0 comments

International Monetary Fund head Dominique Strauss-Kahn said Wednesday a planned trip to Madrid later this week was a "working visit."

The trip has added to speculation, dismissed by Strauss-Kahn and senior EU officials, about a bailout for Spain, which is trying to put its strained public finances in order through tough austerity packages and economic reforms.

Asked by AFP about this speculation, the IMF chief said: "I go to all the European countries. I am in France (today) -- are there such rumours about France?

"Tomorrow I go to Italy. Are there such rumours about Italy? I was in Belgium a week ago. Were there such rumours on Belgium?" he added.

Strauss-Kahn is due in Madrid on Friday to meet Spanish Prime Minister Jose Luis Rogriguez Zapatero.

Asked if was purely a "courtesy visit," Strauss-Kahn replied: "It is a working visit," without giving further details.

At the same time, he noted that "people were exaggerating a lot when they say (Spain) is facing great difficulties but its public debt is 53 percent (of Gross Domestic Product,) which if I recall correctly, is relatively modest."

Under EU rules, a member state is supposed to keep its total debt below 60 percent of GDP and its annual public deficit below three percent. Last year, Spain's public deficit jumped to 11.2 percent but it has promised to slash it back to below three percent by 2013.

Spanish press reports said Wednesday the IMF was working with the European Union and Washington to draw up a rescue plan for Spain worth up to 250 billion euros (307 billion dollars).

Spanish business daily El Economista, citing "sources close to the issuing entity," said the IMF, the EU and the US Treasury had drawn up a liquidity plan for Spain including a credit line of up between 200 and 250 billion euros.

The plan would use money from a special-purpose fund set up by the 16 nations that use the euro single currency that has up to 440 billion euros to lend to eurozone nations that run into Greek-style debt problems, it added.

Asked about the possibility of such a plan being prepared for Spain, Finance Minister Elena Salgado said: "Absolutely not. I don't know anymore how you want me to deny it."

The European Commission dismissed the reports as "rubbish."

"I can firmly deny this story," EU economic affairs commissioner Olli Rehn spokesman said. "I checked of course from the commission side if there was any team sent from Brussels, as the article claims. And I can say that that story is rubbish."

A string of leading EU figures have had to deny persistent reports that Spain is preparing to call for help in the run-up to a key EU leaders summit in Brussels on Thursday.

© 2010 AFP

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