IMF says it's ready to bail out Greece
By Karolina Slowikowska |
December 31, 2009, Thursday
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Print Edition
Print Edition
THE International Monetary Fund is ready to help Greece if it or the European Union asks for assistance, but the 27-nation EU should create its own mechanism to help such cases, the IMF's head for Europe said.
"The EU should create a mechanism to help out countries which found themselves in Greece's shoes. But one has to believe Greece will solve its problems by itself," Marek Belka, director of IMF's European Department, said yesterday.
Asked whether the IMF would be ready to help bail out Greece, Belka said: "Yes, we are ready. But it depends on whether the EU or Greece will request it."
Soaring budget deficits and worsening debt dynamics have dealt Greece consecutive downgrades by the three major credit rating agencies this month, resulting in higher borrowing costs next year for the eurozone's most indebted country.
Investors have worried that debt problems could ultimately prevent Greece from borrowing in the bond market, potentially forcing the EU into a costly bailout and denting confidence in the euro and European assets.
But, delivering the third of those rating cuts last week, Moody's Investors Service said the country remained far from crisis and that the risks were long-term rather than near-term, driving a sharp recovery for Greek banks and bonds.
Striking an upbeat tone on Romania, Belka said he was confident Romania would receive its next tranche of aid under an IMF-led US$20 billion package after the government approved an austerity budget for 2010.
Romania's parliament is due to begin talks on January 11 on the centrist coalition's budget bill, seen as key to freeing up more aid under the IMF-led support.
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