IMF Sees Need To Increase Greek Aid Because Econ Worse: Press

Author: Market News International | Category: News

BERLIN (MNI) – The International Monetary Fund believes that the
aid plan for Greece needs to be modified because of the deteriorated
economic outlook for the country, German weekly Der Spiegel reported on
Sunday, citing an internal IMF document.

According to the magazine, the IMF sees three options now: 1.)
Greece must cut its expenditures even more, or 2.) private creditors
must write off a larger share of their claims, or 3.) Eurozone states
must increase their financial support for the country.

Greece’s private creditors are currently in talks with Greek
officials for an exchange of outstanding debt that would reduce the
nominal value of some E205 billion worth of Athens’ sovereign bonds by
50%. That is part of an accord reached by EU leaders in late October,
which also includes a plan for new bailout loans for Greece of E120
billion from Eurozone national governments and the IMF.

Meanwhile German weekly Bild am Sonntag (BamS) reported Sunday that
the CEO of the European Financial Stability Facility (EFSF), Klaus
Regling, has reaffirmed that he plans to offer potential investors in
the rescue fund a guarantee of up to 30% on their investment.

BamS also wrote, citing German official sources, that the
government in Berlin might propose requiring Eurozone governments to
fund the future bailout fund, the European Stability Mechanism (ESM), up
front this year and not in tranches over several years as had been
previously planned.

Separately, European Central Bank Executive Board member Joerg
Asmussen urged in an interview published Sunday that ECB board members
not contradict each other in public.

“The Executive Board must be a team,” Asmussen told German weekly
Welt am Sonntag (WamS). “It must show cohesion externally.”

Asmussen, a German national, replaced the outgoing Juergen Stark,
also a German, at the beginning of this year. Stark left the ECB in
protest over the central bank’s purchases of Eurozone government bonds,
and because of dissatisfaction over prevailing trends in the euro area.

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

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