UPDATE 1-IMF chief: euro zone lifeline must boost growth
+ Part of euro zone rescue should go to growth-IMF chief
+ Not IMF role to tell Spain what to do-Strauss-Kahn
+ IMF SDRs should be convertible to yuan, real-Mantega
(Adds details)
BRASILIA (Reuters) - Part of a rescue package meant to shore up the euro should go toward sparking growth, the managing director of the International Monetary Fund said Wednesday.
While the $1 trillion euro stabilization plan from the IMF and the European Union, meant to ease concerns about a sovereign debt crisis in some nations, is helpful, "part of this money should be used to boost growth," Dominique Strauss-Kahn told reporters in Brazil's capital.
"Because without growth prospect in the euro zone and European countries it will be difficult to get out of the crisis."
Nor is it the role of the IMF to tell Spain -- among euro zone nations now facing fiscal crisis -- how to solve its problems, Strauss-Kahn said.
But, he added, that country is going in the right direction.
Deep debts in Spain, Greece and Portugal, among others, have roiled markets in recent weeks, sparking investor fears of sovereign defaults and the possibility of a hobbled euro zone economy dragging on a global recovery.
Investors have responded by dumping riskier assets and running to safe havens such as the U.S. dollar and the Japanese yen.
In contrast, Strauss-Kahn heaped praise on Brazil's economy, noting its brisk expansion and praising government policies taken during the global financial crisis to bring the country back to growth.
Now is probably time for those stimulus measures to be withdrawn, Strauss-Kahn said.
The IMF will "see how the (Brazilian) government will manage to have again next year and the year after this high level of growth, but I am confident that this will be done," he said.
But he said little about increasing the participation of emerging countries in the IMF, even as Brazil's finance minister, Guido Mantega, called for a bigger role for Latin America's biggest economy in the fund while speaking at the same event.
The IMF's special drawing rights should be convertible into the Chinese yuan and the Brazilian real as well, Mantega said.
The SDR is the IMF's international reserve asset, meant to supplement member countries' official reserves. The basket of currencies that defines the rights includes the euro, yen, pound sterling, and dollar. (Reporting by Ana Nicolaci da Costa; Writing by Luciana Lopez; Editing by Kenneth Barry)
REUTERS
