IMF: Greek crisis unlikely to spread to other euro zone countries
09 March 2010
Greece's financial crisis is unlikely to spread to other euro zone countries with high debt levels, the head of the International Monetary Fund has said.
IMF managing director Dominique Strauss-Kahn said "there's no reason" to expect that Spain and Portugal would also need to call for external support. Mr Strauss-Kahn's comments came after the Greek prime minister met French president Nicolas Sarkozy. Mr Sarkozy pledged French support for Greece, which helped lift the euro.
Although the French president stopped short of detailing what support France will offer, he said it would stand "resolute" behind Greece. German Chancellor Angela Merkel made similar comments on Friday.
Mr Strauss-Kahn told the Reuters news agency: "We have a problem with Greece. We don't have a problem with Spain to date. The eurozone has to deal with the Greek problem. They are doing this. No one knows what's going to happen tomorrow morning but there's no reason why the spillover to Portugal or to Spain will take place."
Mr Strauss-Kahn added that while the IMF would be prepared to help Greece, "so far I think that the Europeans will be able to deal with the problem".
'Concrete methods'
Greece is trying to reduce its public deficit this year from the current 12.7% - more than four times eurozone rules - to 8.7%. The country's Prime Minster George Papandreou says he does not want direct financial aid from other countries, merely assistance to make it cheaper for Greece to borrow funds from the international markets.
At present concern about the state of the nation's finances make it more expensive it for it to borrow compared with most other European countries. It has been widely speculated that France and Germany will assist Greece through their leading banks buying up Greek government bonds, but so far nothing has been confirmed.
Mr Sarkozy said "concrete, precise methods exist" to assist Greece, but declined to reveal them.
"They will allow us - when the time comes - to show that Greece isn't just supported politically but supported in all the aspects of its eventual requests," he added.
Mr Sarkozy also suggested that there may be moves to clamp down on financial speculators exacerbating Greece's problems."If Greece needs them [the measures], we'll be there. Speculators...must know that 'solidarity' means something."
Source: www.bbc.co.uk
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