Greece may look to IMF for bailout | Europe| News and current affairs from around the continent | DW | 18.03.2010
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Greece may look to IMF for bailout

Greek Prime Minister George Papandreou said Thursday that his country may ask the IMF for a bailout, a move which Germany would support. Analysts, however, think Athens is simply trying to provoke a concrete EU aid plan.

A package addressed to Greece, in front of a Greek flag

The EU has agreed on bailout terms, but has yet to implement them

Germany would back a bailout from the International Monetary Fund for debt-stricken Greece, government sources said Thursday, though stressing it has not yet come to that.

"We would be open to an intervention from the IMF if that should become necessary," a spokesman from the finance ministry, who asked not to be identified, told Agence France-Presse. "The government's position has not changed and remains as follows: the issue of financial aid to Greece has not arisen and there is no need to take a decision."

Athens has not yet asked for any aid from the Washington-based global lender. But Greek Prime Minister George Papandreou floated the possibility earlier Thursday in the European Parliament, saying that "in the end Greece may have to choose the option to go to the IMF."

A report from the Dow Jones Newswires quoted a senior Greek official as saying Athens may apply for IMF financial aid as early as the beginning of April. In response, the euro dropped further against the dollar, with Greek bank shares and bonds also hit.

"We have taken today measures that the IMF would have asked us to take. In fact, we are under an IMF program. However, we don't have the facilities that the IMF could give," he said, adding that Greece did not want to be in "a situation when we have the worst of the IMF and none of the advantages of the euro zone." Papandreou stressed that Greece would not default or leave the euro zone.

Greek Prime Minister George Papandreou with European Commission President Jose Manuel Barroso at a press conference

Papandreou, left, with European Commission President Jose Manuel Barroso, said Greece may have to resort to the IMF

Papandreou said Greece cannot achieve its promised deficit cuts if borrowing costs remain so high, and said EU leaders had "an opportunity to make a decision" on a bailout from the euro zone at a summit of EU leaders next week. He said concrete EU support could force market rates down and make a call to the IMF unnecessary.

EU bailout plan ready and waiting

On Monday, EU finance ministers agreed to terms for a possible multibillion-euro rescue for Greece. Analysts said Greece's talk of an IMF intervention is likely just a tactic to pressure EU leaders into implementing the plan.

"The IMF talk…is intended to push euro zone partners into making explicit the standby arrangement which seems to have been agreed upon at the European Council level, in the hope that such an announcement will push Greek government bond spreads to tolerable levels for Greece to proceed with borrowing," said Michael Massourakis, head of economic research at Alpha Bank in Athens.

Along with Germany, however, a number of European countries support the idea of Greece turning to the IMF, among them Britain, Sweden, Finland and the Netherlands.

A spokeswoman for the IMF said the lender still expects Athens to resolve the debt crisis on its own.

"We are working closely with the EU Commission and I believe we've often said that we expect the EU, the euro zone countries, to want to and to plan to resolve this question by themselves," said IMF spokeswoman Caroline Atkinson.

Editor: Susan Houlton

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