By Johanna Treeck

WASHINGTON (MNI) – Austria and other Eurozone governments stand
ready to provide loans to the Greek government quickly once plans have
been finalized, European Central Bank Governing Council member Ewald
Nowotny told Market News International on Saturday.

Speaking to MNI on the sidelines of the International Monetary Fund
and World Bank meetings here, Nowotny said that Greece’s decision to
activate the rescue plan has further minimized risks of a spillover
effect from Greece into other Eurozone countries.

The head of the Austrian National Bank also said the IMF accepts
that monetary policy considerations cannot be part of the conditions
imposed on the Greek government.

Nowotny dismissed concerns that lengthy national procedures, for
example in Germany, could delay financial support and spark further
market turmoil.

“A couple of countries are already in the position [to disburse
loans] and Austria is one of them,” Nowotny said. “In principle, the IMF
is also in the position to do so too,” he added.

“The rules hold that not all funds have to be released at the same
time. That means that those countries already in the position to
participate, as well as the IMF, can act immediately and other countries
could follow,” he said.

“The only condition is that there be a clear, signed accord with
Greece,” but once that happens money can flow, Nowotny argued. “That
means we have the ability to react relatively swiftly.”

The ECB has repeatedly asserted that any deal must not impinge on
its independence, but thus far the IMF has not publicly confirmed that
it will exclude monetary policy from the Greece negotiations — in
contrast to its usual approach.

The IMF, the ECB and the European Commission are working out their
conditions together so that there “will not be two sets of different
conditionalities,” Nowotny explained. “It is a common process. What is
entirely clear is that monetary policy of the ECB cannot be part of
negotiations.”

Asked whether the IMF shares this view, Nowotny said: “That is
completely clear. Absolutely.”

While Greece’s decision to call on the aid package “had been
expected,” it was nevertheless widely welcomed at the meetings in
Washington, Nowotny said. And he reiterated that the move will diminish
even further the risk of any contagion within the Eurozone.

“One has to say that economic data do not argue for a spillover.
The debt ratios of other countries are significantly lower than that of
Greece. They do not have a credibility problem,” he said.

“This [fear] is something that is driven by speculation,” Nowotny
said. “And, hopefully, this has been stopped now.”

Activation of the Greece package is a “protective vaccination
against infection,” he said.

–Frankfurt bureau, +49 720 142; jtreeck@marketnews.com

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