Quantcast

IMF chief backs Greek loans extension

Published: Tuesday, Dec. 7 2010 10:58 a.m. MST

ATHENS, Greece — The head of the International Monetary Fund said Tuesday the organization supports a plan to extend Greece's repayment of bailout loans, and he urged the European Union to seek a "comprehensive solution" to the continent's government debt crisis.

Greece is currently negotiating terms of repayment for the three-year, €110 billion ($150 billion) bailout loan that saved the debt-ridden country from default in May. The loan package ends in 2013, but analysts and officials have been concerned over Greece's ability to cope with the large debt repayments it would face afterward, in 2014 and 2015.

"We saw there was a problem of the length of the period of repayment, and I'm advocating the fact that we should lengthen this period," IMF chief Dominique Strauss-Kahn said during a one-day visit to Athens.

Last month, European Union governments agreed to look into extending the repayment deadline for Greece from three years to 7 1/2 years, bringing the Greek loan package in line with Ireland's. The terms of the repayment — the timing schedule and whether it would include the full €110 billion or just the portion still to be disbursed — have not been decided.

Strauss-Kahn said a decision would have to be taken by the IMF and EU together, and that "my view is that more and more people in the European Union understand there's a need to do something like this."

"It's not an urgent question, but there's no reason to wait too much," Strauss-Kahn said during a news conference with Greek Prime Minister George Papandreou. "And on our side we are ready to do it."

On Monday, Jose Manuel Barroso, head of the European Union's Executive Commission, said in Brussels that the EU has already decided in principle to extend Greece's loans.

"This was a crucial decision for the credibility of the program. The technical details are under study and should be finalized soon," Barroso said.

Strauss-Kahn said Greece's priority now should be to restore growth.

"What has to be the most important thing in the coming months is to restore growth because without growth there's no solution to the problem of the country," he said.

Facing a mountain of debt and a deficit of 15.4 percent of gross domestic product in 2009, Greece's Socialist government has imposed tough cost-cutting measures, including reducing civil service salaries, trimming pensions and increasing consumer taxes, in order to receive the bailout loans.

Speaking to Parliament's Economic Affairs Committee later Tuesday, where he was grilled by opposition deputies, Strauss-Kahn said Greece's fiscal adjustment program "is broadly on track ... and growth will return at the end of 2011. Let's say in 2012."

The government still faces a tough year ahead "because there are many sectors where spending is still going on without enough control," the IMF chief said, adding that wages must now be brought in line with productivity.

"The financial problem will be solved, but the problem is to regain the competitive economy. We are very impressed with what has been done," he said.

Greece is not the only eurozone country to be facing problems, and Strauss-Kahn advocated a comprehensive solution to the European debt crisis.

"We believe in the IMF that dealing with one country, then dealing with another country, maybe tomorrow with a third country, is not a good way of addressing the problem," he told reporters.

While he disagreed with those saying the debt crisis puts the future of Europe's single currency at stake, he said the problem is one that needs to be addressed. He said that would take time but he's confident it will happen.

Meanwhile, protests against austerity measures continued.

On Tuesday, about 500 pensioners marched through central Athens ahead of Strauss-Kahn's arrival, while about 2,000 protesters from a communist-backed union rallied outside Parliament before his appearance there.

"We are to protest the black alliance of the IMF, the government and big business," said student protest organizer Sofia Emmanoulla. "They claim to be taking measures for our benefit while they cut our wages, pensions and working rights."

Strauss-Kahn said he understood why people were upset at the measures and why they would chant "IMF go home."

But, he said, "Don't fight against the doctor. Sometimes the doctor gives you medicine you don't like. But even if you don't like the medicine, the doctor is there to try to help you."

Get The Deseret News Everywhere

Subscribe

Mobile

RSS