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JENS STOLTENBERG

Norway offers IMF €7 billion to help eurozone

Norway on Wednesday offered the International Monetary Fund (IMF) about €7 billion ($9.2 billion) to help bolster the European economy, Prime Minister Jens Stoltenberg said.

Norway offers IMF €7 billion to help eurozone
Photo: Guri Dahl/Office of the PM (File)

"Norway today offered the International Monetary Fund a loan of 55 billion kroner to help stabilise the European economy," Stoltenberg told reporters.

Earlier this week, the 17 countries that share the euro pledged €150 billion ($195 billion) in bilateral loans for the International Monetary Fund to assist the debt-laden eurozone.

European Union leaders had called at a December 9th summit for €200 billion, including contributions from non-eurozone countries.

"We are doing this because it is in our interest to restore enough order in the international economy to be able to get out of the crisis we are currently bogged down in," Stoltenberg said.

"It is not a gift, it is an investment," he insisted.

The loan requires approval from the Norwegian parliament and is conditional on other contributions from other countries, he said.

Four non-eurozone members of the EU — the Czech Republic, Denmark, Poland and Sweden — each pledged on Monday to make loans to the IMF for use in stabilising the eurozone.

But Britain, also a member of the EU but not of the eurozone, has meanwhile refused to stump up its roughly 30-billion share.

Norway is not a member of the EU but its economy is heavily dependent on exports to the region.

While the Norwegian economy remains robust thanks to its oil industry — it is the world's seventh-biggest exporter of black gold — the Scandinavian country is concerned about an economic slowdown in Europe that would lead to a reduction of its exports.

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ECONOMY

Italy’s economic policies will hit the poor hardest: IMF

Economic policies implemented by the populist government in Rome leave Italy's economy vulnerable to recession, with the poorest likely to suffer the most, the IMF warned.

Italy's economic policies will hit the poor hardest: IMF
Italy's economic policies could lead to recession, the IMF said. Photo: Andreas Solaro/AFP

“The authorities' policies could leave Italy vulnerable to a renewed loss of market confidence,” an International Monetary Fund annual report on the country said yesterday.

“Italy could then be forced into a notable fiscal contraction, pushing a weakening economy into a recession. The burden would fall disproportionately on the vulnerable,” the IMF added.

The Italian economy, the eurozone's third largest, fell into a technical recession at the end of 2018.

The fund expects the Italian economy to grow by no more than 0.6 percent this year, well below the government's own estimate of 1.0 percent.

The European Commission is tipped to lower its Italian growth forecast on Thursday, and slower growth could spell trouble for Italy, where around 20 percent of national output is swallowed up each year by payments on the public debt, the second biggest in the eurozone.

Photo: Depositphotos

The IMF report praised the coalition government's “objective to improve economic and social outcomes (as) welcome.”

But it added that the only sustainable way of achieving such goals was through “faster potential growth” that would require structural reforms, “a credible fiscal consolidation” and stronger bank balance sheets.

The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the EU Commission and financial markets.

The IMF report emphasised Wednesday that Italy “needs to tackle long-standing structural impediments to productivity growth. 

“This includes decentralising the wage bargaining regime, liberalising service markets, and improving the business climate.”

Deputy Prime Minister and M5S leader Luigi Di Maio quickly rejected the IMF report, charging that the Fund “has starved people for decades.”

The IMF, Di Maio claimed, “has no credibility to criticise a measure like the citizenship income programme,” the party's plan to introduce a welfare payment of 780 euros a month for Itay's least well-off.

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