IMF says it is not preparing a bailout for Spain

WASHINGTON – The International Monetary Fund says it has not been asked by Spain for a bailout and has not begun preparing one.

IMF spokesman Gerry Rice spoke Thursday as Spanish Deputy Prime Minister Soraya Saenz de Santamaria flew into Washington for talks with IMF Managing Director Christine Lagarde and U.S. Treasury Secretary Timothy Geithner. The officials were discussing how Spain can finance an overhaul of its banking sector.

Saenz de Santamaria said that it was coincidental that she was coming to Washington in the midst of the banking crisis because her meetings were scheduled months ago.

The government nationalized a major bank earlier this month. It now says it will need to inject $23.6 billion in public money into the bank — more than twice what the government had estimated.

Doubts over how recession-hit Spain will handle the bailout have sparked concerns that the country will soon follow Greece, Portugal and Ireland in asking for financial assistance.

Lagarde called her meeting with Saenz de Santamaria productive. She also denied a Wall Street Journal report that the IMF was drawing up plans for a rescue loan for Spain.

“There is no such plan,” she said.

Saenz de Santamaria said that she discussed with Geithner some of the ideas being discussed in Europe about how to set up a fund to recapitalize European banks.

“The problem is not Spain as a country,” she said. “But our financial system in a given moment has needs just like the other states had at other times.”