13 MAY 2011
By Harry Banks | City A.M.
DESPITE bailouts for Greece, Ireland and Portugal, Europe’s debt crisis may yet spread to core Eurozone countries and emerging eastern Europe, the International Monetary Fund (IMF) said yesterday.
The warning came as government sources in Athens said international inspectors checking on Greece’s compliance with its EU/IMF rescue package had found problems and were pressing for deeper spending cuts to cover a likely revenue shortfall.
The IMF said it stood ready to provide more aid to Greece if requested, though the country that triggered Europe’s sovereign debt crisis in 2009 still had plenty of untapped potential to raise extra cash itself though privatisations.
“Contagion to the core euro area, and then onwards to emerging Europe, remains a tangible downside risk,” the global lender’s latest economic report on Europe said.
Finance ministers of the 17-nation single currency area are set to approve a €78bn (£68bn) rescue plan for Portugal next Monday after Finland’s Prime Minister-in-waiting clinched a deal to ensure parliamentary approval of the package.
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