BERLIN (MNI) – IMF Acting Managing Director John Lipsky on Tuesday
praised the outcome of the meeting of Eurozone finance ministers in
Luxembourg, saying he hoped for real progress on Greece’s fiscal
problems now.

“I think it is a positive signal that the Eurogroup came to a
consensus view on the way forward” for Greece, Lipsky told reporters at
the sidelines of an event organized by the American Academy in Berlin.

The IMF head said he is now “very hopeful” on Greece and “hopes to
see real progress” in the country.

In order for the fifth tranche of financial aid from the IMF and
the EU to be paid out to Greece, the Greek authorities need to assure
that they will go ahead in implementing the structural and fiscal
adjustment program, Lipsky stressed. Otherwise, the conditions for
paying out this aid will not be met, he reminded.

Asked to comment on a possible additional financial aid package for
Greece, Lipsky said that there “was no request by the Greek authorities
to discuss a new program.”

In his speech and a question-and-answer session, Lipsky said the
core problem of Greece and Portugal was not their elevated public debt,
but their lack of economic competitiveness.

“If competitiveness cannot be restored in these economies than
growth cannot be restored, this is the focus,” the IMF head elaborated.
“Debt is a problem that reflects the underlying problem of a lack of
competitiveness.”

As long as these countries will continue to implement the required
adjustment programs, “we will make sure that their financial needs are
met,” Lipsky vowed.

If Greece implements the structural reform program fully, “it has a
reasonable chance of success,” he reckoned. Yet, the key question
remains whether the Greek government will be able to actually implement
the painful reforms, he added.

Asked to comment on widespread market expectations that Greece will
eventually default on its debt, Lipsky acknowledged that “right now
there is scepticism in the markets.” Yet, he noted that “markets get it
wrong, markets change their mind.”

Commenting on global developments, the IMF head said “it remains a
concern” that developed economies are not producing sufficient growth to
substantially reduce unemployment.

Regarding emerging economies, the trend of rising consumer price
inflation is becoming worrisome, Lipsky said. “Emerging economies are
growing in a way that threatens to become unbalanced,” he warned.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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