WASHINGTON — European officials said Tuesday they plan to appeal for deeper involvement by the International Monetary Fund in addressing the region's debt crisis, an acknowledgment that their own efforts have fallen short.
Meeting in Brussels, the finance ministers from the 17 countries that use the euro approved a new $10.7 billion loan package for Greece to help it stave off default and agreed to bolster their bailout fund from $587 billion to $1.3 trillion. The fund is supposed to be a firewall that protects nations from financial chaos.
But they recognized that the fund was unlikely to attract enough private investment to provide emergency financing to large countries such as Italy and Spain, which must raise hundreds of billions of dollars in coming months. So the ministers said they would push for an increase in IMF funds available to eurozone countries.
The idea is to use the agency as a sort of conduit, allowing wealthier countries such as Germany, or perhaps the European Central Bank, to provide money that could then be directed back to Europe.
The IMF would oversee how the money is used, ensuring that Italy or other possible beneficiaries adhere to specific targets for reducing government deficits or making economic changes.
The eurozone nations "agree to rapidly explore an increase in the reserves of the IMF through the use of bilateral loans," Jean-Claude Juncker, head of the finance ministers group, said at the end of Tuesday's meeting in Brussels. Olli Rehn, head of European economic and monetary affairs, said discussions with the IMF were under way and that European nations could be tapped for loans to the agency.
The IMF did not comment on the reports out of Brussels.
Italy remained an enormous concern. Carrying five times as much debt as Greece, Italy was battered for the third straight day in the bond markets, seeing its borrowing rates soar to unsustainable levels of 7.56 percent. Investors appear increasingly wary of the country's chances of avoiding default — and making matters worse, the eurozone's third-largest economy is deemed too big for Europe to bail out.
The ministers insisted Italy's new prime minister would come through, saying he has promised to balance Italy's budget by 2013.
Information from the Associated Press was used in this report.