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Europe

Germany Prepared to Lend Financial Help to Eastern Europe

German Chancellor Angela Merkel said her country was ready to help eastern European countries experiencing economic difficulty. Aid would come mainly via the IMF and likely go to nations outside the euro zone.

Montage of Euro notes, the EU flag and wrapped gifts

Germany is ready to offer aid to suffering European nations

When asked about the financial woes facing several eastern European economies, Merkel said Germany was prepared to rescue ailing nations.

"If help is needed we are ready, particularly through the IMF," Merkel said. "Germany will not refuse to (financially) support the IMF if necessary. But we should avoid talking down countries that are not encountering difficulties because there are lots of rumors circulating that can breed weakness."

Poland, the Czech Republic and Hungary have all seen their currencies come under serious pressure, causing companies to close and leading to millions in losses for people and businesses who have borrowed in foreign currencies including the euro.

As finding sources of financing becomes more difficult, the Romanian central bank said this week it might seek help from the International Monetary Fund as Hungary and Latvia did last year.

Euro zone proven worth in crisis

Montage of backlit figures walking on euro notes to a massive one euro coin

Poland hopes marching quickly to the euro will help the economy

The European Commission was "contemplating all scenarios" and had 15 billion euros available after providing a total of 9.6 billion euros to Hungary and Latvia, European Commission President Jose Manuel Barroso said at press conference with Merkel.

He added that the commission had not received any other requests for aid.

Asked whether Germany would offer financial support to ailing euro-zone countries, Merkel wouldn't commit to a pledge made earlier in the week by her country's Finance Minister, Peer Steinbrueck.

"I will not participate in any speculation, but I can say the euro zone is strong and has proven itself in the crisis," Merkel said.

Finance Minister Peer Steinbrueck said on Monday that although EU rules said countries should not help each other within the euro zone, all members of the bloc would have to help "if it came to a serious situation."

Barroso said euro-zone members were in "much better shape" than countries outside the currency bloc.

Poland eyes euro adoption

Montage of IMF logo on top of a falling stock market curve

The IMF has already lent to some struggling European nations

Poland, which managed to avoid much of the initial stages of the global economic downturn, has been hit hard by a sliding currency and plunging growth figures and has turned to the euro as a way out of the crisis.

"Secure public finances and a quick adoption of the euro are the best way out of the crisis," Polish Finance Minister Jacek Rostowski told lawmakers on Thursday, defending the government's decision not to increase Poland's budget deficit.

The financial crisis is putting pressure on countries such as Ireland and Greece, whose bad credit rating is making it difficult to raise the money to pay off huge state debts. Germany, meanwhile, has the best credit rating in the EU and would be expected to foot a large part of the bill in order to hold the euro zone together.

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