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IMF says assessing Greek debt, welcomes ECB pledge
July 26, 2012 / 3:06 PM / 5 years ago

IMF says assessing Greek debt, welcomes ECB pledge

WASHINGTON (Reuters) - The International Monetary Fund said on Thursday program talks with Greek authorities are likely to continue into September and confirmed that part of its work in Athens will include assessing whether Greece’s debt levels are sustainable.

IMF spokesman David Hawley said it was too soon to discuss details of the talks currently underway in Athens between the authorities and international lenders, including the IMF, European Central Bank and European Commission.

“It is premature to talk about outcomes,” Hawley told a news briefing.

He declined to comment on a report by Reuters earlier this week that said Greece’s official sector creditors -- the ECB and euro zone governments -- will have to restructure some of the estimated 200 billion euros of Greek government debt they own if Athens is to be put back on a sustainable footing.

Without elaborating he said the IMF always conducts debt sustainability tests in countries where it has funding programs.

“Assessing debt sustainability is always part of IMF discussions with authorities in this or any other country when there is a program relationship,” he said.

Indeed, without a debt restructuring of Greece’s official sector debt, Europe will have to pony up more money for Athens, one financial diplomat in Washington told Reuters.

The IMF said on July 12 following a fact-finding mission to Greece that the economy was “going through another difficult period” and the program was off track.

The current talks are the first since a conservative-led coalition government won elections on a pledge to renegotiate parts of the 130 billion euro international bailout.

The United States this week also sent a Treasury official to Athens and Rome for talks as it continues to press for action to avoid widespread financial contagion from the euro zone crisis.


Meanwhile, the IMF on Thursday welcomed a pledge by ECB President Mario Draghi to do whatever it takes to protect the euro zone and said it was vital that Spain and Italy implemented policy measures to address problems in their economies.

“Draghi’s remarks are a welcome reiteration of the ECB’s well-known commitment to do what is necessary,” Hawley said.

Concerns are growing over rising Italian and Spanish borrowing costs, and questions are being raised again over whether Greece will remain in the euro zone.

While he would not comment on levels of borrowing costs, Hawley said it was vital that both Italy and Spain implement announced policy measures to address problems in their economies.

“In Spain the authorities have been taking strong and wide-ranging reform measures and implementation is key,” Hawley said. “Spain’s prospects will also be helped by further progress at the European level,” he added.

For Italy, Hawley said accelerating reforms in the services sector and labor markets, and locking in necessary legislative measures, would strengthen confidence.

Reporting by Lesley Wroughton; Editing by James Dalgleish and Andrew Hay

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