Reports in Italy suggested that the IMF is drawing up plans for a €600 billion (£517 billion) assistance package for the country. Spain may be offered access to IMF credit, rather than a rescue package, to avoid it being “picked off” by the markets in the coming weeks.
Any IMF involvement in European rescue packages would be partly underwritten by British taxpayers, which could leave this country liable if Italy and Spain did not repay any international loan.
Britain provides 4.5 per cent of the IMF’s funding and would, therefore, face a potential liability to an Italian package of up to €27 billion (£23 billion).
An IMF rescue package involves a country being offered hundreds of billions of euros in return for agreeing to launch a major austerity programme to cut spending. A credit line is a more flexible arrangement which gives countries short term access to international finance.