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IMF could help Greece, says Germany

Greece's debts are affecting the value of the risk-sensitive currency euro
Greece's debts are affecting the value of the risk-sensitive currency euro RFI

Germany might not oppose Greece resorting to the International Monetary Fund (IMF) for aid in tackling its debt crisis, officials said today. Meanwhile, the EU has repeated calls for the eurozone to find a mechanism in case Greece does ask for help.

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“The German government has not ruled out the option of the IMF contributing financial aid”, government spokesperson Ulrich Wilhelm said in Berlin, insisting that “this question remains open".

Wilhelm pointed out that Greece still has not applied for financial aid. He stressed again that Berlin assumed the government's austerity programme will be successful.

Berlin has so far opposed contributing to an aid package for Greece, faced with a sometimes virulent media campaign against such a move at home.

German Finance Minister Wolfgang Schaeuble earlier this month brought up the idea of a European version of the IMF, believing that the 16-nation eurozone should solve problems without resorting to outside help.

"Mr. Schaeuble would like to see the euro area being able to master the situation under its own steam," his spokesperson Michael Offer said in Berlin on Friday.

The German government believes that changes to the 27-country European Union's governing treaties would have to be made in order to create a European lender of last resort. Other EU members oppose this idea.

European Commission President Jose Manuel Barroso told French media on Friday that the eurozone countries, including Germany, would be ready to extend aid to Greece if asked.

"Germany is ready in case Greece needs it, and so far Greece has not asked for financial support," Barroso said, who met Greek Prime Minister George Papandreou earlier this week.

Barroso said eurozone countries should have "some kind of mechanism" ready as soon as possible in case Greece asks for financial support.

Countries are preparing their positions for an EU summit in Brussels on Thursday and Friday. Britain and Sweden, which are not members of the eurozone, have both stressed that the IMF has special expertise in mounting country rescues, but they emphasised that eurozone countries should take a lead.

Athens’s fiscal woes have pushed the eurozone into its biggest crisis since the single currency’s adoption in 1999.

The EU’s Growth and Stability Pact forbids countries from having public debt higher than 60 per cent of Gross Domestic Product. The public deficit of eurozone members, or new borrowing per year, cannot be higher than three per cent of GDP. Greece is not the only eurozone member with problems. Here’s how other European countries are peforming:

Greece: Public deficit: 12.7 % of GDP (in 2009); Public debt: More than 300 billion euros, or 125% of GDP (2010 forecast); Unemployment rate: 9.7%.

Germany: Public deficit: 5.5 % (2010 forecast); Public debt: 76 %; Unemployment rate: 8.6 %. 

United Kingdom: Public deficit: 12.7 % (2009); Public debt: 80.3% (2010 forecast); Unemployment rate: 7.8%.  

Spain: Public deficit: 11.4 % (2009); Public debt: 66.3% (2010 forecast); Unemployment rate: 19.5 %. 
 
Portugal: Public deficit: 9.3 %; Public debt: 84.6% (2010 forecast); Unemployment rate: 10.4%.

Italy: Public deficit: 5.3 % (2010 forecast); Public debt: 115.8 %; Unemployment rate: 10 %.

Ireland: Public deficit: 14.7 % (2010 forecast); Public debt: 82.9% (2010 forecast); Unemployment rate: 13.3%.

France: Public deficit: 8.2 % (2010 forecast); Public debt: 83.2 % (2010 forecast); Unemployment: 10 % (fourth quarter 2009).

 

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