IMF Dismisses the Idea that Greece’s Debt Problems Could Spread to Other Eurozone Nations

IMF managing director Dominique Strauss-Kahn believes Greece’s financial crisis is unlikely to spread to heavily indebted eurozone countries such as Portugal, Spain or Ireland and dismissed market speculation of potential default as scare-mongering.

In an interview with Reuters in the Kenyan capital, Nairobi, Mr. Strauss-Kahn, who is currently visiting the African continent to discuss the opportunities and the challenges facing Africa in the wake of the global crisis, said [Reuters]: “You can add to the list all of the countries in the Eurozone, to try to scare people about everything. I don’t think it will happen.”

“We have a problem with Greece,” he said.” We don’t have a problem with Spain to date. The eurozone has to deal with the Greek problem. They are doing this. No one knows what’s going to happen tomorrow morning but there’s no reason why the spillover to Portugal or to Spain will take place.”

Strauss-Kahn also said he did not think IMF involvement with Greece would be needed beyond the current levels of technical assistance. An IMF team went to Athens in January to advise on tax administration, tax policy, budget management and pension reform.

Greek Prime Minister George Papandreou said last week he might have to go to the IMF to meet debt obligations next month if the EU did not offer help with funds. Athens needs to borrow 53 billion euros this year — at least 20 billion euros to cover maturing debt in April and May — to repay existing debt and cover its massive budget deficit.

Strauss-Kahn expressed confidence the eurozone could handle Greece’s 300 million euro ($407.5 billion) debt.

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