G7, IMF Welcome Spain Aid Deal

The Group of Seven industrialized nations and the International Monetary Fund have welcomed the Eurozone governments' decision to provide financial support to Spain's ailing banking sector.

On Saturday, Eurozone ministers agreed to lend Spain up to EUR 100 billion to shore up its banks.

"I strongly welcome the statement by the Eurogroup, which complements the measures taken by the Spanish authorities in recent weeks to strengthen the banking system," IMF Managing Director Christine Lagarde said in a statement on Saturday.

She said this scale of proposed financing, which is consistent with the capital needs identified in the FSAP, gives assurance that the financing needs of Spain's banking system will be fully met.

"The IMF stands ready, at the invitation of the Eurogroup members, to support the implementation and monitoring of this financial assistance through regular reporting," Lagarde added.

In a statement released by the US Treasury Department, G7 finance ministers said they "welcome Spain's plan to recapitalize its banking system and the Eurogroup's announcement of support for Spain's financial restructuring authority."

According to Eurogroup statement, the planned financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The Fund for Orderly Bank Restructuring (F.R.O.B.), which acts as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned.

In a note released on the same day, President of the European Commission Jose Manuel Barroso and Vice-President Oli Rehn said the Commission is ready to proceed swiftly with the necessary assessment on the ground, in close liaison with the European Central Bank, European Banking Authority and the IMF, and to propose appropriate conditionality for the financial sector