BRUSSELS ? In a dramatic turnaround, a senior official for the International Monetary Fund on Wednesday retracted an earlier comment that the IMF could intervene in bond markets to support struggling Italy and Spain.
"The fund can only lend its resources to countries, and cannot use these resources to intervene in bond markets directly," Antonio Borges, the head of the IMF's Europe program, said in a statement.
"Any alternative lending modalities to what we do now would require a different legal structure" for the IMF, the statement continued, adding that such changes had not been discussed with the fund's members.
Earlier Wednesday, Borges had said at a news conference in Brussels that the IMF could possibly invest alongside the eurozone's bailout fund to help Italy and Spain.
Such a move would have signified a completely new role for the IMF, which has been a key contributor to the bailouts of Greece, Ireland and Portugal. So far that help has only come through direct loans to the bailed out countries and not through intervention on the bond market.
The European Central Bank has been buying the bonds of Italy and Spain in recent weeks in an effort to lower those countries' funding costs and keep them from being dragged into the debt crisis.
However, that role is meant to soon be taken over by the eurozone's bailout fund, the euro440 billion ($587 billion) European Financial Stability Facility. The IMF's support for that would have been a significant move, since it has much larger resources.
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