ECB, IMF deny talks about Spain bailout
European Central Bank and the International Monetary Fund deny that they are in negotiations on a rescue package for Spain.
FRANKFURT - The European Central Bank and the International Monetary Fund denied on Friday that they were in negotiations on a rescue package for Spain.
Media reports to that effect were "unfounded. No negotiations are ongoing. It would be up to (Madrid) to decide to make a request," said an ECB spokeswoman. IMF chief Christine Lagarde also issued a firm denial that she is
negotiating bailout aid for Spain with the ECB.
Bringing up what she characterised as reports of "deep negotiations" with ECB head Mario Draghi, Christine Lagarde told a news conference after Eurogroup talks in Cyprus that "I can assure you we are not".
Earlier, the Dutch financial daily Het Financieele Dagblad had said the ECB was in talks with the IMF on a Spanish rescue package worth 300 billion euros ($390 billion). Spain said earlier this week it will watch how its borrowing costs evolve before deciding whether to seek a full-blown bailout.
The newspaper, without revealing its sources, said the ECB-IMF package would pave the way for the central bank to buy Spanish bonds to bring down Madrid's borrowing costs under the ECB's new bond-buying plan,known as OMT.
The ECB, however, wanted to make sure the IMF was on board as well to ensure that Spain faces strict conditions to cut spending and reform its economy, the report said. Last week, the ECB unveiled a revamped bond-purchase scheme, called Outright Monetary Transactions or OMTs, under which countries wishing to benefit must first apply for a bailout from one of the eurozone's two rescue funds.
And cash from those funds is to be conditional on governments meeting agreed reform targets. The ECB spokeswoman said Friday that the "conditionality required as a pre-requisite of the OMT programme is known". OMT was "a monetary policy initiative and cannot be made conditional to any negotiations. The ECB will take its decisions if the necessary
external conditions are met," the spokeswoman said.