Germany, IMF, ECB calls for sped-up action on Greek crisis as more negative signals emerge

08:22, April 29, 2010      

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German Chancellor Angela Merkel said on Wednesday that Greece were not allowed to repeat another Lehman-like contagious crisis, and bailout talks should be sped up, as Greece, Portugal and Spain's credit rating were downgraded successively by international agency in less than 48 hours.

"The handling of the Greece case shows that everyone knows we cannot allow the same situation with countries as with Lehman Brothers," Merkel told reporters in Berlin after hosting a conference with the heads of the International Monetary Fund (IMF), the World Bank, the World Trade Organization, the International Labour Organization and the Organization for Economic Cooperation and Development.

International rating agency Standard &Poor's cut Spain's credit rating from AA plus to AA on Wednesday, a day after it downgraded Greek bond to "junk status" and Portugal's credit. The three eurozone countries all have a poor-balanced budget with large debts.

On Wednesday, the euro slid 0.4 percent to 1.3117 dollars in late afternoon European trading, which was its lowest level in a year.

"If the stability of the eurozone as a whole is in danger, every member state, including Germany, feels the responsibility to maintain this stability," Merkel said.

"It is perfectly clear that the negotiations with the Greek government, the European Commission and the IMF need to be accelerated,"Merkel said after meeting IMF managing director Dominique Strauss-Kahn. She said Germany hoped the talks could be concluded "in the next few days."

The IMF, the European Union and the European Central Bank (ECB) officials were negotiating a three-year fiscal authority plan with Greece, which was a premise for Germany on releasing emergency loans to the debt-stricken country.

"Everything else depends on the program," Merkel stressed, while Strauss-Kahn said that "it is almost obvious" that Greece would agree on this program soon, and he hoped the talks would be ended "very fast."

"Every day that is lost, it is getting worse and worse in Greece and Eurozone, " Strauss-Kahn said. However, he also mentioned that "You shouldn't believe too much what they (rating agencies) say even if it may be useful."

ECB President Jean-Claude Trichet also believed that it was " an absolute necessity to decide very rapidly" on aid to Greece, and Athens would agree to the budget-cut plan, which was " courageous and convincing."

The euro zone has prepared a 30-billion-euro (40 billion dollars) aid package for Greece for one year, with an additional loan from the IMF worth of around 15 billion euros.

Strauss-Kahn told lawmakers in German lower house of parliament on Wednesday that the package would cover three years, and the total amount would be between 100 billion euros and 120 billion euros, according to German television N-TV's reports and some lawmakers' comments after the meeting.

Both Merkel and Strauss-Kahn refused to elaborate on the amount of the aid package. "Let us talk about numbers once the program has been negotiated," Merkel said.

Germany "will make its own contribution" in pulling Greece out of crisis, if the Athens was determined to implement its austerity measures in next few years, Merkel said.

In line with the negotiating bailout proposal, Germany, the largest economy in Europe, would pay 8.4 billion euros per year, the biggest single contributor among 16 eurozone States. Germany' s commitment is considered critical in curbing the debt crisis and stabilizing the euro currency.

Several recent polls showed that the majority of Germans did not want to their country to be involved in helping Greece.

Merkel's Christian Democrats (CDU) is facing a key regional election on May 9, in North Rhine-Westphalia, Germany's most populous state. Some analysts said Merkel was in a difficult position when pressed by two contradictory forces on the Greece issue: the urgent call from European partners and the strong opposition at home.

To avoid angering the voters, the chancellor said several times: "I understand the worries of the (German) people very well, and this is why I am placing a lot of value on a sustainable, fully elaborated program," insisting that Germany's aid was "conditional" on Greece's taking proper steps to first cut its own budget.

Source: Xinhua


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