IMF mulls how to better help countries under strain

Reuters

International Monetary Fund

The global lender was responding to weekend reports, including one in Japan's Yomiuri Shimbun, that said the IMF would create a new short-term lending facility to prevent the current financial crisis in Europe from spreading.

Continue Reading Below

The newspaper, citing unnamed sources, said the IMF was likely to provide funds for countries like Italy and Spain where government bond yields remain at high levels.

In a statement, the IMF said that over the past year it was reviewing existing lending arrangements, building on reforms begun in 2008 and 2009 to add to its tools for responding to crises.

It did not directly respond to the suggestion that it might set up a new lending facility.

"The aim of the review is to enhance the ability of the Fund to mitigate contagion by providing liquidity to countries with relatively strong policies and fundamentals that are affected by heightened global or regional financial market stress," the IMF said.

But it said its efforts were intended to meet potential needs of all its members and were not "targeted at particular countries" and have no indication when it might come to any decisions.

(Reporting by Glenn Somerville, editing by Sofina Mirza-Reid)