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Papakonstantinou: The International Monetary Fund is the last hope for Greece

20 February 2010 / 10:02:47  GRReporter
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Minister of finances Georigos Papakonstantinou does not exclude the possibility for Greece to look for the help of the International Monetary Fund (IMF) on the way to the financial stabilization. In an interview for the international information agency Reuters the minister said that currently he does not have a particular decision as the IMF is a financial institution outside of the European Union, “however its support offers a possibility for Greece to exit the current economic crisis.” This statement of the minister of finances supports mostly the wide spread opinion of the famous professor in economics Nouriel Roubini. He is a person who supports the idea that more than anybody “Most of all Greece needs the IMF”. Only the help provided by the specific world financial organization will recover the trust in the Greek economy and will help for stabilizing of the financial situation in the country claims Roubini.

Papakonstanonou is definite that until the European central bank and the European investment bank do not give more specific and detailed outlines of the subsidy they are ready to provide to Greece, the markets will continue to speculate and the spread index will continue to grow. The increase of its value inevitably will affect the size of the foreign debt and the public deficit. “The best way to prevent an additional increase (of the spread) is to lay all the cards on the table. We don’t really need to use all this subsidies they will only act as a guarantee in front of the international markets,” said the minister of finance. At the end of the day the task of the socialistic government to decrease the deficit under 3% of the GDP by the end of 2012 will become more and more difficult if the powerful countries in the European Union do not announce what kind of assistance they are ready to provide for the solving of the “Greek problem”. The credit program of the country for this year includes at least 53 billion euro, out of which 20 billion have to be taken by the end of Mayand currently the spreads between the Greek government bonds and the German ones remains high – about 330 basic points. The IMF as a financial institution has a greater power before the international markets and whit its guarantees Greece will be able to rehabilitate its lost positions much quicker. On the other hand if a country member of the euro zone asks for the help of the IMF the trust in the euro currency as a whole will be undermined.

At the same time the final term when the government has to submit the full and detailed information regarding the methods for financing the government budget in 2010 already came. The deal with Goldman Sachs, which GRreporter covered earlier this week is subject of investigation by the European commission. The European statistic service expects to receive an explanation from Greece for the use of derivatives and modern financial instruments for covering the real size of the foreign debt of the country before accepting the common European currency. The main goal of the investigation is to determine whether Greece has presented real data regarding the size of the foreign debt at that time. “Deals from this period are completely legal and the country has not used any illegal methods of financing,” was definite the minister of finance Papakonstantinou. Regardless of this “the European commission will carry out the necessary investigation and will announce its conclusion on this matter before the council of the financial ministers of the EU and eventually before the wide public,” said the representative of the European commission Amadeus Alafack.

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