IMF head to visit Spain amid reports of rescue plan

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The head of the IMF will visit Spain later this week, the government said on Wednesday, amid fresh press reports that the body is drawing up a rescue plan for the country together with the EU and the US Treasury of up to 250 billion euros.

The director of the Washington-based International Monetary Fund, Dominique Strauss-Kahn, will meet with Spanish Prime Minister Jose Luis Rogriguez Zapatero on Friday, the government said in a statement.

Earlier on Wednesday Spanish business daily El Economista, citing "sources close to the issuing entity", reported that the IMF, the European Union and the US Treasury had drawn up a liquidity plan for Spain including a credit line of up between 200 and 250 billion euros (335 billion dollars).

The plan would use money from a special-purpose fund set up by the 16 nations that use the euro single currency that will have up to 440 billion euros to lend to euro zone 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."

German media on Friday also reported that a rescue plan was being prepared to aid Spain, which had the third-largest public deficit in the eurozone last year after Greece and Ireland.

The reports were denied by the Spanish government, the European Commission and the Germany government.

The Spanish government has unveiled billions euros in spending cuts this year to slash the public deficit to the eurozone limit of 3.0 of GDP by 2013 from 11.2 percent last year.

© 2010 AFP

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