IMF Offl:Greek Default Not on Table;Aid to Enable Debt Payment

–Aid to Keep Greek Out of Mkts for 18 Months But Could Return Sooner

By Heather Scott

WASHINGTON (MNI) – The possibility of a Greek debt default is “not
on the table,” since the joint aid package of the International Monetary
Fund was designed to allow the country to pay its obligations while
it implements needed adjustment measures, an IMF official said Thursday.

Meanwhile, the IMF is calling on other countries facing fiscal
difficulties to swiftly implemented their own adjustment steps, the
kinds of “fundamental” changes the markets are watching for, IMF
spokeswoman Caroline Atkinson told reporters at the regular biweekly
briefing.

While she declined to comment specifically on the
less-than-confident market reactions to the announcement a financial aid
package was in place for Greece, Atkinson said, “As we’ve said many
times, default is not on the table, has not been on the table.

“The Greek authorities themselves have repeated that, and ECB
President (Jean-Claude) Trichet repeated that this morning,” she said.
“In that sense you could say that the fears are an overreaction.”

The IMF board Sunday is expected to approve the $40 billion aid
package for Greece — the second largest ever by the fund — which
Atkinson said is deliberately designed to allow Greece to stay out of
financial markets for more than 18 months, through 2012.

The “substantial and appropriately-sized” program includes front
loaded adjustment measures that represent the “unprecedented effort” by
the Greek authorities, backed by “unprecedented support” from the IMF
and European nations, she said.

“If implemented, the adjustments that address fiscal and
competitiveness issues, will put Greece in position to pay it debts,”
and down the road will allow renewed economic growth.

As the fears have spilled over to other countries, Atkinson said
that it is important to note that in addition to the support for Greece,
“a number of other countries that need to have some fiscal adjustment
are indeed considering or in some cases implementing already fiscal
adjustment measures. And I think that these fundamental steps are what
is most important to fight contagion.”

She said the IMF is calling for “swift implementation” of steps to
put public finances “back on stable path,” but she stressed that
countries like Spain, Portugal and Ireland “have rather different
starting conditions from Greece, lower debt, better public finances,
better track record, not the problems with data.”

While public reaction in Greece to the planned adjustment measures
is understandable, “violence is deplorable,” Atkinson said.

The program includes tax administration measures “aimed at
spreading the tax burden more fairly,” as well as fiscal measures “aimed
at protecting most vulnerable part of society,” she said.

** Market News International Washington Bureau: 202-371-2121 **

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