-Warns Against Any Attempts To Undo Italy Reforms

By Brai Odion-Esene

WASHINGTON (MNI) – The aid package for Greece agreed to by euro area
finance ministers in Brussels will play a vital role in easing the burden on the
debt-laden nation, a spokesman for the International Monetary Fund said

He also cautioned against giving into the temptation — when a new
government is elected in Italy — to rollback the unpopular measures implemented
by the current authorities, arguing that Italy Prime Minister Mario Monti has
put the country “on the right path.”

As for Greece, “the package agreed to in Brussels today, including the debt
buyback program, will deliver substantial debt reductions to Greece,” IMF
External Relations Director Gerry Rice told reporters during a briefing.

Greece’s European partners will work to ensure that financing for Greece
remains adequate and that the country’s debt remains on a sustainable track,
Rice added. “This includes the targets of 124% of GDP by 2020 and substantially
lower than 110% by 2022,” he said.

Eurozone finance ministers Thursday approved the release of E49.1 billion
in aid to Greece, agreeing to meet the extra cost of Athens’ debt buyback
program and pledging to take additional measures to ensure the country’s debt
sustainability as necessary.

A first tranche of E34.3 billion to finance the recapitalization and
restructuring of Greek banks will be paid in the coming days, Jean-Claude
Juncker, chair of the Eurozone finance ministers’ meeting said. The remaining
aid, to cover shortfalls in Greece’s budget, will be disbursed in three tranches
over the first quarter of 2013, provided Athens sticks to reform commitments.

The IMF believe the decision by eurozone finance ministers to approve the
aid is important for Greece, Rice said.

“The big objective is to help Greece get back on the sustainable path for
growth, for jobs — and the debt sustainability is key to that,” he said.

In a statement following the announcement by the eurogroup, IMF Managing
Director Christine Lagarde said she would recommend the IMF’s Executive Board
back Greece’s aid program, and that she expected the IMF Executive Board to meet
in January.

Rice said the IMF wants to move “as expeditiously as possible” but that
there are the usual preparation of documents as well as time needed for the
board to review them, hence the meeting in January rather than sooner.

What is important now is that Greece continues to implement the reform
measures required by its international lenders, Rice said.

Another euro area country that has been in the news lately is Italy. Last
weekend, Prime Minister Mario Monti announced he would step down once the
parliament passes Italy’s 2013 budget law.

His surprise announcement has since sparked fears that a new regime in
Italy will not show the same level of commitment to economic reforms and fiscal
consolidation displayed by Monti’s technocrat government and could reverse some
of his measures.

Rice said Monti has taken “bold steps” to improve Italy’s fiscal health,
and has initiated important structural reforms.

“We believe the key now is to continue with the implementation of those
reforms to secure sustainability and revive growth quickly,” he said. “Italy is
now on the right path of fiscal consolidation … continuing on that path with
implementation is the way forward.”

Rice said it is the IMF’s belief that current steps being implemented by
the Italian government are the right steps to spark growth and job creation.

–MNI Washington Bureau; tel: +1 202-371-2121; email: besene@mni-news.com

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