Bloomberg News

Greece Has ‘Little Scope for Deviation’ in Aid Program, IMF Says

July 13, 2011

(See {EXT4 <GO>} for more on Europe’s sovereign-debt crisis.)

July 13 (Bloomberg) -- Greece has little margin for error in implementing the budget cuts and asset sales attached to its 110-billion euros ($156 billion) bailout, the International Monetary Fund’s staff said.

In an appraisal of Greece’s policies under the joint rescue plan with the European Union, the IMF warned that exceptional liquidity support from the European Central Bank is “critical.” European policy makers need to decide how to provide additional funding for Greece, the staff said.

“For the program to succeed, it is essential that the authorities implement their fiscal and privatization agenda in a timely and determined manner,” the IMF staff wrote. “The debt dynamics show little scope for deviation.”

European finance chiefs haven’t yet agreed on how to reduce Greece’s debt burden, floating ideas this week from bond buybacks to a temporary default as they sought to shift a strategy that has failed to contain the debt crisis.

Christine Lagarde, the new IMF chief, told reporters this week that the IMF is not yet discussing details of a second bailout package and that “nothing should be taken for granted.”

--Editors: Kevin Costelloe, Vince Golle

To contact the reporters on this story: Sandrine Rastello in Washington at srastello@bloomberg.net Maria Petrakis in Athens at mpetrakis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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