ECB not in talks with IMF on Spain

Frankfurt: The European Central Bank rejected a media report Friday which said it is negotiating with the International Monetary Fund on a rescue package for Spain.

“The reporting is unfounded. No negotiations are ongoing. It would be up to (Madrid) to decide to make a request,” said an ECB spokeswoman.

Earlier a report in the Dutch financial daily Het Financieele Dagblad said the ECB is 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.

The ECB spokeswoman said the “conditonality required as a pre-requisite of the OMT programme is known. OMT is 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.”