21 JUN 2011
Fund says that 'unproductive debate' about bondholder haircuts must be brought to an end
By Sarah Collins
The IMF has urged eurozone countries to stump up extra cash for Greece and refrain from "unproductive" arguments about possible bondholder haircuts.
In a report on the economies of the 17 countries making up the single currency zone, the Washington-based fund warned the eurozone to "bring the unproductive debate about debt re-profiling or restructuring to a closure quickly" and avoid the impression that losses will be forced on investors as a condition of future loans.
"While courageous attempts have been made to address the crisis, policymakers are yet again facing uncomfortable dilemmas, raising uncertainty about the final outcome," the fund said yesterday, after calling for a "truly cohesive approach" to deal with the eurozone's money troubles.
The criticisms came after eurozone finance ministers failed to release a €12bn portion of EU-IMF aid that Athens needs to pay off maturing debts in July and August.
The money will only be paid out once the Greek parliament has put through a €28bn austerity plan and begun a €50bn round of privatisations, with relevant laws due to be passed in Athens before the end of June.
"In contrast to Ireland and Portugal, who appear to have a high degree of internal political consensus, Greece's national unity has become a prerequisite for our partners," Greece's new finance minister Evangelos Venizelos said in a statement yesterday.
Finance ministers have said they will sign off on the aid tranche during a further emergency meeting on July 3, provided the Greek vote goes through.
"It's clear that the debt is sustainable but the debt will only remain sustainable if Greece complies with all of the commitments entered into," said Luxembourg's prime minister, Jean-Claude Juncker, who heads up the 17-country eurozone.
The IMF had previously said that it would only stump up its €3bn share of the money if eurozone countries agreed to extra support for Greece.
IMF acting chief John Lipsky said yesterday that he wanted "assurances" from eurozone countries that Greece would be funded through 2012.
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