Tags: germany | greece | imf | bailout

Germany to IMF: Don't Give Greece More Time

Monday, 11 Oct 2010 10:06 AM

Germany moved to stifle suggestions that Greece could get more time to repay a bailout from the European Union and International Monetary Fund.

“We are not in favor of extending the repayments schedule” for Greece, German Finance Ministry spokesman Bertrand Benoit said in a telephone interview today. Any such move would be “premature,” he said.

The German reaction followed comments by IMF Managing Director Dominique Strauss-Kahn and European Central Bank board member Lorenzo Bini Smaghi that extending the repayment of a 110 billion-euro ($154 billion) bailout was conceivable amid concern that Greece’s debt load may require a restructuring.

Germany’s opposition follows its reluctance to approve the credit line to Greece and Chancellor Angela Merkel’s demand that the IMF participate. In return for the aid, Greece agreed to slash its deficit from 13.6 percent of gross domestic product in 2009, the EU’s second biggest after Ireland, to less than 3 percent in 2014. Prime Minister George Papandreou has cut wages and pensions and raised taxes to lower the shortfall.

The EU also sought to stem the speculation that extending the three-year repayment is under consideration. Greece is unlikely to need a longer period to repay the emergency loans because of progress in cutting the budget and “no concrete plans” exist for offering a longer repayment period, an EU statement said.

The IMF is prepared to give Greece more time to repay its loan to the institution if European nations, which provided the bulk of the package, decide to do so first, Strauss-Kahn said yesterday.

Strauss-Kahn Interview

Greek officials are doing “exactly what they need to do” to rein in spending and meet the benchmarks set out as a condition of aid, Strauss-Kahn said in a television interview with Bloomberg HT. Whether Greece needs the extension depends on the state of the global economy, he said.

“If the Europeans decide to do something, we certainly will do the same thing,” Strauss-Kahn said. “We can do this and it may be useful, but it’s only a small part.”

Bini Smaghi had earlier told a panel in Washington that the IMF had mechanisms to “prolong packages” for countries receiving assistance and is “thinking” about it for Greece, though nothing has been decided.

Going to Plan

Simonetta Nardin, a spokeswoman for the fund, said the IMF had “no concrete plan” to alter the schedule of repayments because it’s likely “Greece will be able to fully cover its external financing need from the markets from 2012, as assumed when the program was approved” in May.

“We are aware that markets are concerned about the repayment schedule related to official supports,” she said in an e-mail. If such concerns were to linger, the fund’s options include lengthening repayment periods, replacing shorter-term with longer-term loans, and agreeing to a new program when the current one comes to an end.

Greece’s gross borrowing needs will rise to 70.8 billion euros in 2014 as repayments to the EU and the fund increase, IMF documents show.

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Germany moved to stifle suggestions that Greece could get more time to repay a bailout from the European Union and International Monetary Fund. We are not in favor of extending the repayments schedule for Greece, German Finance Ministry spokesman Bertrand Benoit said in...
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2010-06-11
Monday, 11 Oct 2010 10:06 AM
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