Portugal and Spain have not asked for rescue talks: IMF

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Portuguese and Spanish authorities have not asked for negotiations with the International Monetary Fund, a senior IMF official told reporters on Monday at the Global Agenda Summit in Dubai.

"At this time neither authority has asked for negotiations ... with the IMF so the relationship continues normally" with the fund, said John Lipsky, the fund's first deputy managing director.

"Both the Portuguese and Spanish authorities have announced new programmes. The Portuguese authorities just adopted a new budget for 2011 and Spanish authorities have announced over the weekend some new initiatives," said Lipsky.

On Friday, Portuguese Prime Minister Jose Socrates said his government was able to fund its needs on the bond market after parliament gave final backing to a hard-hitting 2011 budget.

Portuguese officials also scrambled to deny a media report that the country's eurozone partners were pushing it to seek outside financial help as its borrowing costs climbed.

"Portugal has all the conditions to finance itself on the market," Socrates said.

Meanwhile, Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Saturday his government was ready to "accelerate" economic reforms if necessary, amid deep concerns on the world financial markets.

On Friday, Zapatero ruled out an Irish-style rescue for Spain and markets cranked the country's debt risk premium up to record highs.

The prospect of a costly rescue for Spain's economy, which is twice the size of that of Ireland, Greece and Portugal combined, is sowing deep concern in world financial markets.

Investors are demanding increasingly high rates in return for taking the risk of buying Spanish debt, adding to the problems faced by Madrid in raising fresh cash.

Spain's economy was hard hit by a massive property bubble and the global economic crisis in 2008 and 2009, and it now suffers from an unemployment rate of about 20 percent, along with zero economic growth in the third quarter.

More than 600 participants are attending the three-day Global Agenda Summit organised by the World Economic Forum that opened on Monday.

© 2010 AFP

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