Tags: IMF | Greek | Progress | Elections

IMF to Review Greek Progress After June Elections

Thursday, 17 May 2012 11:40 AM

 

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The International Monetary Fund will not return to Greece to review its loan program before Athens holds fresh elections on June 17, an IMF official said on Thursday.

"We take note that elections have been called and we look forward to being in contact with the new government when it has been formed," David Hawley, IMF deputy director of external affairs, said at a news briefing.

Without additional support, Greece may run out of money before the end of June to pay government salaries and social welfare programs. It depends on a 130-billion-euro support program from the IMF and the European Union.

But the IMF only disburses funds if a country complies with economic reforms tied to the program. The Greek public has overwhelmingly rejected the austerity measures, throwing into question the future of the IMF/EU bailout program.

The IMF official repeated the calls from its Managing Director Christine Lagarde for European leaders to reach a comprehensive solution to the eurozone crisis.

The IMF has called for four actions — strengthening of financial defenses against contagion, measures to support demand in the short term including an accommodative monetary policy, country reforms to promote competitiveness and a clear plan for euro area integration and risk sharing.

Hawley said that the European Central Bank has further room to support growth by lowering its key interest rate, given the weakening economic conditions. Growth has stalled in the euro area and several countries are in recession.

"Further unconventional policy measures could also be needed," he added.

The ECB has already bought bonds aggressively but Germany's Bundesbank has resisted cutting its benchmark rate below 1 percent or buying more bonds, insisting instead that indebted countries rely upon reform programs to rebuild market confidence in their economies.

Hawley declined to comment on the worsening stress in the European banking system, and liquidity problems at some Greek banks. Depositors have accelerated withdrawals from Greek banks in recent days amid speculation Greece may leave the eurozone.

© 2014 Thomson/Reuters. All rights reserved.

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