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Greece calls in the IMF to help sort out massive debt

THE International Monetary Fund (IMF) will send a team to Greece today after the Greek government requested assistance in tackling the eurozone's largest budget deficit.

"On request of the Greek authorities, a staff team from the IMF will visit Athens starting January 12 for about a week to explore possibilities for technical assistance from the IMF in the coming months on pension reform, tax policy, tax administration and budget management," a spokeswoman for the Washington-based lender said in an e-mailed statement.

The mission is "within the context of the regular surveillance that the IMF provides to its membership", according to the IMF statement.

Greece's problems have served to turn attention away from Ireland's in recent months.

Although both countries are borrowing roughly similar percentages of gross domestic product, Greece's total borrowing is much higher than Ireland's.

Greece last week rejected speculation that it would need a bailout to tackle the deficit.

The IMF, which has moved to shore up economies including Hungary to Pakistan over the past 18 months, is "taking a close look" at Greece's policies "and forming an opinion about their likely impact", IMF official John Lipsky said last week.

Greece is an IMF member in "good standing", Mr Lipsky said.

Finance Minister George Papaconstantinou will give details to the European Commission this month on how Greece will meet its deficit-cutting pledges as he seeks to avoid possible penalties under the EU's excessive-deficit procedure.

Mr Papaconstantinou has pledged to cut the deficit to 8.7pc of gross domestic product this year and below the EU's 3pc limit by the end of 2012, a year earlier than the original plan.

The widening deficit prompted Fitch Ratings, Standard & Poor's and Moody's Investors Service to lower Greece's creditworthiness last month, fuelling concern about a possible default.

ECB executive board member Jurgen Stark said in an interview last week in Italian newspaper 'Il Sole-24 Ore' that markets were "deluding themselves" if they were counting on a European Union bailout. (Bloomberg)

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