EC insists: Spain asked IMF to monitor bank rescue

The European Commission insisted Monday that Spain asked the IMF to contribute monitoring expertise to an aid programme agreed by eurozone finance ministers for Spain's financial sector. According to the Commission, the International Monetary Fund will be part of a "Quartet" to conduct surveillance over Spain's finances -- with up to 100 billion euros ($125 billion) of loans for Spanish banks funnelled through a government body, the Fund for Orderly Bank Restructuring (FROB). The role of the Washington-based IMF is politically sensitive in Madrid, with the Fund seen as pushing for the toughest austerity measures in previous, government bailouts for Greece, Ireland and Portugal. Amadeu Altafaj, spokesman for EU economy commissioner Olli Rehn, said: "All members of the Eurogroup... including the Spanish authorities" had indicated during Saturday's video conference that they "wanted to have the IMF on board, to monitor, to have the benefit of their experience." Altafaj also stressed that the IMF would not make loans, and that the Fund's role was therefore "minor." "Is it the 'Men in Black,' as they have been called... is it a Troika... frankly, this is not so important," he told a news briefing in Brussels. Altafaj said that in both the evaluation of how much was required in loans, and the conditions applied, coming weeks would see "effectively, the Commission (working) in liaison with the ECB (European Central Bank), the IMF but also the EBA (European Banking Authority). "That's not a Troika, this will be a Quartet," he said, while underlining that the final report to the Eurogroup before it signed off on loans would be made by the Commission. Earlier on Monday, Germany's finance minister Wolfgang Schaeuble said the monitoring in Spain was "only about a restructuring of the banking sector. That is the difference." In an interview on German radio, he said:"While Portugal, Ireland and Greece are under macroeconomic adjustment programmes, it is important they are monitored ... Spain does not need that," he said. "It's about Spanish banks, not about Spanish fiscal policy ... because on this point, Spain is on the right path," concluded Schaeuble. "But the restructuring of the Spanish banking sector must be negotiated separately and it must be monitored to ensure that it is being kept to," he said. Monitoring was important because loans granted to the Spanish government would inevitably have an impact on Spain's public debt, Altafaj said. "Obviously there is an impact on the debt," the spokesman said. However, he added that the Eurogroup "expressed confidence that Spain will honour its commitments" to reduce its public deficit to levels allowed by European Union law. Spain is supposed to slash its deficit from 8.9 percent of output last year to 3.0 percent in 2013, but the Commission might ask EU partners to push the deadline back to 2014. Altafaj stressed that loans for Spanish banks were only available from EU rescue funds provided Madrid "fully complies" with an agreed timetable for the correction of its deficit. The 100-billion ceiling was to "cover all eventualities, even under the most adverse scenarios," he underlined. Altafaj also confirmed that loans from an incoming European Stability Mechanism would have "preferential status," compared with a first phase of aid to be provided by the European Financial Stability Facility.