Jean-Claude Juncker, the president of the Eurogroup, has said he is open to the idea of the International Monetary Fund helping Greece deal with its financial crisis.
Juncker said he wanted eurozone countries to provide the “lion’s share” of any aid for Greece, but added that it was not “absolutely necessary” for a summit of EU leaders this week to agree to such a plan.
His comments, made to the European Parliament’s economic and monetary affairs committee, reflect divisions among Eurogroup countries over how to help Greece as it tries to reduce its deficit.
George Papandreou, Greece’s prime minister, and José Manuel Barroso, the president of the European Commission, have called on EU leaders to come up with a co-ordinated package of bilateral loans to Greece at their 25-26 March summit in Brussels.
But Angela Merkel, Germany’s chancellor, is opposed to announcing measures to help the Greek government before it officially asks for assistance. Merkel faces opposition from voters to Germany paying to help Greece.
She has suggested Greece go to the IMF for loans, a move that other eurozone members, including France, oppose, saying that it would damage the credibility of the Eurogroup.
Juncker said a compromise could see a “twin track” aid plan in which the EU and the IMF join forces to help Greece.
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“It is quite possible that we would have recourse to a double instrument, part of which would be assistance made available by the IMF and a larger portion made available by members of the Eurogroup,” Juncker said. “It is too early to close the debate at this stage, but we need to make rapid progress on this.”
Dominique Strauss-Kahn, the IMF’s managing director, met Herman van Rompuy, president of the European Council, last week, EU officials confirmed.
Juncker stressed that Greece’s austerity measures were “credible” and would be sufficient to meet the EU’s demands that it cut its deficit by four percentage points this year. He added that if Greece needed aid from the EU, it would get it.
“Greece will not be abandoned if we see that Greece needs the Eurogroup’s assistance,” Juncker said.
Papandreou last week warned that his country would go to the IMF if the EU did not agree on a precautionary aid offer this week.
Greece is hoping any bilateral loans offered by the EU or the IMF would be at a lower interest rate than it currently has to pay to raise capital in the markets.
The country plans to issue new government bonds worth €20 billion in April and May to refinance its debt, but does not want to have to pay interest rates of over 6%, which Papandreou says is damaging efforts to reduce the government’s budget deficit.