IMF official urges stronger EU response to debt crisis

Reuters News
Posted: May 20, 2011 1:05 PM
IMF official urges stronger EU response to debt crisis

DUBLIN (Reuters) - Euro zone policymakers must produce a more comprehensive sweep of measures to tackle the bloc's debt crisis decisively, stumping up more money to keep countries afloat, a top IMF official said on Friday.

Continued European Central Bank liquidity support for countries with banking sector problems was also critical, Ajai Chopra, the head of the International Monetary Fund mission to Ireland, said.

"A key element of a comprehensive European solution is a stronger area-wide crisis management framework. The priority here is to put into effect quickly an EFSF (euro zone rescue fund) upgrade that can deal more flexibly with the crisis we face today," he told a news conference.

"The magnitude and terms of the financing need to be such that private creditors are convinced that the debt burden will be sustainable even in adverse scenarios and hence debt restructuring is off the table," he said.

All euro zone countries needed to accelerate "repair and reform" of their financial sectors, Chopra said.

"Stress tests need to be followed, where appropriate, with bank recapitalization and in some cases banks may need to be restructured or closed down," he said.

(Reporting by Carmel Crimmins and Padraic Halpin, writing by Mike Peacock)