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Italian prime minister Mario Monti
Italian prime minister Mario Monti
Image: Yves Logghe/AP/Press Association Images

IMF preparing €600bn of assistance for Italy - report

An Italian newspaper reports that the IMF would make available hundreds of billions of euro of credit for Italy in order to try and stabilise the country’s economy.
Nov 27th 2011, 1:43 PM 3,428 21

THE INTERNATIONAL MONETARY Fund (IMF) is reported to be preparing €600 billion worth of credit for Italy to help stabilise the eurozone nation.

La Stampa newspaper reports (Italian) that the IMF is preparing the credit line for a period of between a year and 18 months in order to help new prime minister Mario Monti stabilise the financial situation in the country.

The interest rate paid on such assistance would be between four and six per cent, much cheaper than the current cost of Italian borrowing which has been hovering above 7 per cent for 10-year bonds alone in recent weeks.

The La Stampa report, which cites an IMF insider, says that the source of such a level of funding is not entirely clear as yet with possible assistance from the European Central Bank (ECB).

Although Germany would be resistant to such involvement by the ECB, as is its long-held view, it is reported that Angela Merkel’s government would be assured by the fact the loans to Italy would be “under strict supervision” by the IMF, according to the paper.

Italy has a debt burden of around €1.9 trillion but is also suffering from weak economic growth.

The uncertainty surrounding the country has unsettled markets in recent weeks leading to fears that it would require a bailout in the manner which Greece, Ireland and Portugal have all needed.

A change of government has done little to assuage fears among investors.

For more information, see the report in La Stampa (Italian) >

Read: Italy heads for bailout territory after bond auction >

Poll: Do you think the euro will collapse?

British government warns embassies to be prepared for euro collapse – report >

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Hugh O'Connell

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