IMF and Spain talks not on financial aid

THE International Monetary Fund said on Thursday it was not in talks with Spain on possible financial support as an IMF mission prepared to visit Madrid for annual economic consultations.

Spokesman Gerry Rice told a news briefing that IMF Managing Director Christine Lagarde will meet Spain's Deputy Prime Minister Soraya Saenz de Santamaria for talks on economic developments later on Thursday.

Rice said an IMF mission would be in Spain on June 4 for regularly scheduled talks on the state of the economy.

The debt crisis has escalated in recent weeks with the possibility that Greece, facing a critical general election on June 17, could exit the euro zone and as worries increase over the need to recapitalise troubled Spanish banks.

"The IMF is not drawing up plans that involve financial assistance for Spain nor has Spain requested any financial support from the IMF," Rice told reporters.

Later a Dow Jones news report, quoting unnamed officials, said the IMF was in talks with Spain on contingency plans for a rescue loan. The report caused Wall Street stocks to sharply cut losses.

The IMF, reacting to the report, said it is always assessing different scenarios in all of its member countries and repeated that the global lender was not in talks with Spain on financial help.

"The fund's job is to assess the economic situation, monitor developments, and discuss different scenarios in all of its member countries. That is part of the fund's surveillance work," an IMF spokeswoman said.In Madrid, a source in the economy ministry said the Spanish government was not aware of the IMF's contingency measures.Reuters