Business World

Saturday 25 February 2017

Greece will tame public deficit, says French minister

Sarah Arnott

French Finance Minister Christine Lagarde has voiced confidence that fellow eurozone member Greece will be able to tame a runaway public deficit.

"Greece is not alone," Ms Lagarde said at the World Economic Forum in the Swiss mountain resort of Davos.

The French minister also told journalists at the forum that members of the eurozone were "all jointly accountable to each other".

Commitment

"Being accountable means that when you make a commitment you have to deliver a commitment. And Greece has made some commitments that have been discussed with eurozone members at the (European) Commission," she said.

"I have absolute confidence that the Greek government, under the leadership of (Prime Minister George) Papandreou will put in place these measures" -- aimed at putting finances in order, added the French minister.

EU member states will "be very attentive and . . . we will be following and monitoring that delivery against commitment," she said."

Meanwhile, the International Monetary Fund (IMF) "stands ready" to help Greece with its debt crisis, a senior official said yesterday.

John Lipsky, the first deputy managing director of the IMF, said the fund was in "ongoing contact" with the Greek authorities following a "scoping mission" to assess the possibilities.

"The IMF stands ready to support Greece in any way we can," Mr Lipsky said.

"It is a matter for the Greek authorities to decide, in collaboration with the European Union, but we are here to help if we are wanted."

The comments came against the background of Athens' borrowing costs hitting the highest levels since Greece joined the eurozone in 2001.

Greece's problems began in October, when the newly elected government discovered a deficit at 12.7pc of GDP, more than twice its predecessor's estimate.

The country's creditworthiness was downgraded by all three major ratings agencies in December and last week Mr Papandreou said the country faced an "unprecedented crisis".

Despite Athens' plans to cut the deficit to below 3pc by the end of 2012, doubts are growing about the government's ability to get the spiralling debt under control.

Deadline

Next week, the European Commission will issue its own recommendations and set a deadline for dealing with the deficit, to be endorsed by EU finance ministers later in the month.

Earlier this week, investors showed unexpected appetite for Greek debt when the market responded with €25bn worth of demand for its issue of €5bn worth of five-year bonds, allowing the government to raise the issue to €8bn.

Irish Independent

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