FRANKFURT (MNI) – It is possible Greece will be able to return to
markets already in 2011, even though it is certain that for many years
to come it will have to pay higher yields than before the crisis, IMF
Deputy Director for Europe Poul Thomsen said in an interview published
Wednesday.

For Greece to burden its bondholders with a haircut or for it to
default on its debts “would not be a sustainable solution,” the IMF
official emphasized to Germany’s Handelsblatt.

By the time the aid program to the troubled Mediterranean state
expires in 2013, “the debt percentage will be on the way down. If the
markets see that and the Greek economy is growing again, then investors
will realize that it’s a good business to lend money to Greece.”

Asked under what conditions Greece would be able to borrow, the
official conceded that Greece would “certainly” have to pay higher
yields than before the crisis “for some years. But the combination from
fiscal consolidation and structural reforms should allow Greece to go to
the markets again.”

Pressed if even 2011 would be possible, Thomsen said, “I do not see
this as impossible. We are already registering increasing interest from
investors that up to now concentrate primarily on developing countries
and now are looking at Greece.”

The IMF and EU “know that the redemption deadlines for aid [to
Greece] are relatively short,” and he conceded that “the financial
markets see a problem in this.”

Still, “we hope” that Greece is able to finance itself on markets
at acceptable conditions by 2014 and 2015, when it will have a high
refinancing need, he underlined.

“If not, we will deal with it,” he said, expanding upon what he
said at a press conference in Athens on Tuesday by saying that one
option would be providing credit with a longer maturity — at around ten
instead of five years.

“We are going to have significant debt service payments as the
program ends,” Thomsen had said Tuesday. “We are confident that Greece
will return to the markets in the programmed period. But whether it
would be able to return to market on a scale that will allow it to
borrow not only to roll over its obligations to the markets but also to
its IMF-EMU partners — that is admittedly a question.”

Another possibility would be using new loans to finance
redemptions. “But there has not yet been a decision on this,” he told
Handelsblatt.

Greece’s plan to save an additional E14 billion in its 2011 budget
is “a very ambitious budgetary plan” but can be implemented, he said.

–Frankfurt bureau, +49-69-720142, frankfurt@marketnews.com

[TOPICS: M$$EC$,M$X$$$,MT$$$$,M$$CR$,MGX$$$]