Prague - Czech central bank governor Miroslav Singer considers absurd the idea of the Czech Republic lending money to the International Monetary Fund to help it save the eurozone.
At the same time, Singer said that even though the Czech economy is not posed to grow a lot this year, there is no threat of a 2008-like crisis.
The governor said this in an interview for Hospodářské noviny (Economic Times), a Czech business-oriented daily.
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"No crisis is coming as in 2008. Entrepreneurs do not expect a decrease of production, most of them - the construction sector excluding - have been saying so far that at least in the first half of the year they expect the production to grow by a few percent. However, it will be a year of a mild or slightly negative economic growth," said Singer.
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When asked about the loan by EU member states to the IMF, the governor said it is "totally absurd".
"Europe will declare to the world how much it has lent to the Fund, and then it will ask the world to lend it euros - its own currency over which it has control," Singer was quoted as saying by the daily, adding that the European Central Bank recently injected into the economy two times more than what the IMF would get from all EU countries.
The quality of a loan is determined by the quality of what the institution invests in, Singer also said.
"If the Fund really provided the eurozone with a loan in the planned proportions, it would be a lot of money for one interconnected territory. In relation to its own capital, the Fund has never experienced anything similar. In addition, it has not been very successful in Europe. It has lent money two times to Greece, one time to Portugal and one time to Ireland and it appears that the aid program is working very well only in Ireland," Singer said.
Last year in December at a Brussels summit, EU leaders agreed to provide the IMF with as much as EUR 200bil through bilateral agreements. However, the EU member countries eventually failed to agree to provide the full sum.
So far, only the eurozone has pledged to send the money - EUR 150bil, while non-euro countries are still considering their participation. The Czech Republic has not decided yet.
Czech PM Petr Nečas said earlier that he favors the Czech Republic not participating in the aid, while President Václav Klaus rejected the idea even more openly. However, according to Finance Minister Miroslav Kalousek, the Czech Republic cannot afford to unilaterally refuse the EU plan on helping the eurozone. According to the minister, it is about international relations, not about the budget.
