Brics offer to aid EU ‘interesting development’: IMF

Brics offer to aid EU ‘interesting development’: IMF

Milan: Emerging economies possibly coming to the aid of heavily indebted European Union countries was “an interesting development", the head of the International Monetary Fund (IMF) said on Wednesday.

“The Brics’ (Brazil, Russia, India, China and South Africa) interest is an interesting development," Christine Lagarde, the IMF’s managing director told the Italian daily La Stampa.

“But if they limit themselves to buying bonds deemed safe by everyone, like the German and British (bonds), they wouldn’t be taking much risk. My hope is that if interventions like this take place that they’ll be large and not limited to certain states," she said.

Brazilian finance minister Guido Mantega said on Tuesday that the leaders from Brics nations would discuss possible aid to the European Union, in what would be a reversal of roles, at the annual meetings of the IMF and World Bank next week.

If the Brics decided to invest in Europe this “would not be in disagreement with the Fund. For us, it is an acceptable hypothesis," Lagarde said.

Questioned on the latest version of the Italian austerity programme set to be approved by parliament later Wednesday, Lagarde said the plan went in the right direction.

“But as always in these cases, the key now is determination and the implementation of the measures. It is the only way to convince markets and partner countries of the seriousness of the actions taken," she said.

Despite the announced austerity measures, Italy saw its borrowing prices rise earlier this week in two separate bond emissions.

Lagarde asked European leaders to stay united to resolve the debt question and stimulate growth.