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Debt-Plagued Greece Optimistic on Big Loan Package

Monday, 26 Apr 2010 10:22 AM

 

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Greece's finance minister expressed confidence that European governments and the International Monetary Fund soon would provide billions of dollars in emergency aid so his debt-burdened nation could make a large repayment on time in May.

The official, George Papaconstantinou, said Greece had no intention of defaulting on its debt obligations by repaying creditors less than what they are owed. After weekend talks at the International Monetary Fund's headquarters blocks from the White House, he said he expected the IMF's executive board in early May to approve Greece's request for about $13.4 billion in loans.

"We are all confident that this will be done in time and we will continue to be able to finance Greek public debt without absolutely any problem," Papaconstaninou told reporters.

The IMF's managing director, Dominique Strauss-Kahn, said he was optimistic that "we will conclude discussions in time to meet Greece's needs."

The Greek government, which is putting in place austerity measures, faces a debt payment of $11.3 billion on May 19.

"We are all aware of the seriousness of the situation and the courageous efforts being made by the Greek people," Strauss-Kahn said in a statement.

In addition to $13.4 billion from the IMF, Greece is hoping to obtain loans of about $40 billion from a group of 16 European countries.

Strauss-Kahn said everyone involved in trying to help Greece sees "the need for speed," given the severity of the debt crisis.

Greece's woes weighed heavily on financial leaders as they wrapped up the spring meetings of the IMF and World Bank with a pledge to address the risks facing the global economic recovery.

The bank's steering committee discussed how to increase support to cushion the world's poorest countries from a recession that appears to be ending, even though serious threats such as high government debt and unemployment remain.

"The worst is definitely behind us, but we are not out of the woods yet," Egyptian Finance Minister Youssef Boutros-Ghali, the chairman of the IMF's steering committee, told reporters Saturday.

Crippled by soaring borrowing costs, Greece on Friday made a formal request for the aid. Prime Minister George Papandreou declared in a televised address that his country's economy was a "sinking ship."

European and IMF officials have made clear that their support will carry a high price: putting Greece's fiscal house in order. Greece has already agreed to begin an austerity program that cuts civil servants' pay, freezes pensions and raises taxes. But the country faces years of painful cutbacks and doubts about its long-term finances.

The austerity program has already generated massive street protests in Greece and labor strikes.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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