IMF Pushes Eurozone to Resolve Debt Crisis

Posted October 5th, 2011 at 7:10 am (UTC-5)
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The International Monetary Fund has released its economic outlook report for Europe. The report urges the eurozone to fix its debt crisis, saying countries in the region should use their resources more creatively.

The IMF’s Europe chief, Antonio Borges, added, the fund “should encourage other investors to invest alongside them.”

Belgium and France Tuesday guaranteed that no depositor will lose money, under their plan to save troubled Dexia bank from collapse.

Shares in Dexia plummeted almost 40 percent Tuesday before rebounding, still ending the day down about 20 percent.

Dexia, owned in part by the Belgian and French governments, is burdened by billions of dollars in investments in troubled eurozone economies. Belgium and France say they plan to isolate Dexia’s risky debts in a so-called “bad bank” while guaranteeing its assets.

European stock indexes plunged Tuesday on fears that a possible Greek default could have severe consequences for all banks and private creditors who hold Greek debt.

Eurozone chief Jean-Claude Juncker said Tuesday a decision on whether to give Greece an $11 billion instalment of last year’s $159 billion bailout may be postponed until November. Greece, which had said it would default this month if it did not get the loan payment, now says it has enough cash until mid-November.

Also Tuesday, Moody’s Investors Service cut Italy’s credit rating three notches. It cited Italy’s debt, its shaky political situation, and the overall global economy. Moody’s also says Italy’s outlook is negative.

Prime Minister Silvio Berlusconi says the downgrade was expected. He says his government is working with the maximum effort to reach its budgetary goals.

Another ratings agency, Standard and Poors, cut its Italian credit rating last month.