IMF: Eurozone Countries Shall Make Bold Reforms

The International Monetary Fund (IMF) has told the eurozone it must make bold reforms to reassure financial markets.
A statement from its governing council, says the 17-strong eurozone needs to make major structural reforms to boost confidence and growth.

On Friday, the annual meeting of the global body gained commitments from a range of countries to increase its lending firepower to $430bn (£247bn).

IMF head Christine Lagarde said the money was not just for the eurozone.

The IMF statement said: “In the euro area continued progress on ensuring debt sustainability, securing financial stability and undertaking bold structural reforms will be crucial to boosting confidence and productivity.”
It said that the global economy was recovering gradually but that “risks were high” and interest rates needed to remain low.
The US did not provide any extra loans.
Its treasury secretary, Timothy Geithner, said Europe needed to use imagination and force to fight the continuing debt crisis.

“The success of the next phase of the crisis response will hinge on Europe’s willingness and ability… to apply its tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets,” he said.

German finance minister Wolfgang Schaeuble said the region was working hard to make changes.
“This includes labor markets, social security systems, public administrations and financial market institutions,” he said.
The new money for the IMF’s loan fund almost doubles the amount of money available to $1 trillion.
Some emerging economies expressed concerns that this should not just be used to help Europe.

The IMF’s managing director, Christine Lagarde, welcomed the boost to funds but denied it was earmarked for the eurozone, where the crisis has led to bailouts for Greece, Ireland and Portugal. Some investors fear the crisis could eventually include the much bigger economies of Spain and Italy.

Mrs Lagarde said: “It is nice to have a big umbrella, or a big firewall… and that was really the achievement.”
She said the talks had made clear that: “Number one, those bilateral loans… do not form a special pot of funds or coffers that have an EU label on it. It is for all members of the IMF,” BBC reported.