Oct. 5 (Bloomberg) -- Antonio Borges, the International Monetary Fund’s European department head, said the IMF is working to limit the spread of concerns about Spain and Italy.
“For us, it is absolutely important that we restore confidence in the debt market of Spain and Italy to bring back investors to those markets,” Borges said in the text of remarks at a press conference in Brussels today. Market participants need to be persuaded that it is “appropriate to keep buying this debt,” which may require “some official sector involvement in the process,” Borges said.
He said the situations in Spain and Italy are different than in Greece and Portugal.
“In Italy and Spain, the core problem is one of confidence,” Borges said. “These countries are solvent and should normally have access to markets.”
Borges said Italy has better primary surplus than Germany and the IMF is “reassured” on the Italian budget.
He said the revamped European Financial Stability Facility will have new ways to help Italy and Spain. “The EFSF in its new mandate will have the possibility of intevening in secontary market in ways that would be very helpful for Spain and Italy,” Borges said.
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