IMF readying 600 billion euro bailout for Italy: newspaper

The IMF could bail out Italy with up to 600 billion euros ($800 billion), an Italian newspaper reported on Sunday, as Prime Minister Mario Monti came under pressure to speed up austerity measures.The money would give Monti a window of 12 to 18 months to implement urgent budget cuts and growth-boosting reforms by removing the necessity of having to refinance the debt, La Stampa reported, citing IMF officials in Washington.The report said the IMF would guarantee rates of 4.0 percent or 5.0 percent on the loan -- far better than the borrowing costs on commercial markets, where the rate on two-year and five-year government bonds has gone above 7.0 percent.Italy needs to refinance about 400 billion euros in debt next year.The size of the loan would make it difficult for the IMF to use its current resources so different options are being explored, including possible joint action with the European Central Bank in which the IMF would be guarantor.This scenario is because resistance from Berlin to a greater role for the ECB in helping states in difficulty -- starting with Italy -- could be overcome if the funds are given out under strict IMF surveillance, the report said.French President Nicolas Sarkozys office meanwhile said in a statement that any problem with Italy would hit the heart of the eurozone.Sarkozy and German Chancellor Angela Merkel warned at a summit with Italy in the French city of Strasbourg last week that a collapse of Italy would inevitably be the end of the euro, Montis press office said on Friday.The European Union and the ECB have sent auditors to check Italys public accounts and the IMF is set to send experts soon under a special surveillance mechanism agreed at a G20 summit in France earlier this month.Montis predecessor Silvio Berlusconi said at that summit that he had turned down an offer of financial aid in the form of a precautionary credit line from the IMF, although IMF chief Christine Lagarde later denied the claim.