IMF deadline is nearing, but Greek leaders fail to reach consensus

Political Leaders in Greece have Failed to Reach Concensus on Spending Cuts

Political Leaders in Greece have Failed to Reach Concensus on Spending Cuts

Prime Minister George Papandreou’s new austerity plans failed to cut ice with opposition in Athens today with Conservative leader Antonis Samaras rejecting the proposals saying the proposed measures will “flatten the Greek economy and destroy Greek society”.

Mr. Papandreou has been trying to build consensus as a leader of his Socialist Party to secure a mandate for further cuts.

In a development that is sure to complicate matters further, the chairman of eurozone finance minister has threatened that IMF may not sanction any more bailout packages to Greece.

Jean-Claude Juncker, the Prime Minister of Luxembourg said since Greece is unable to guarantee solvency for next year, IMF may halt its aid program.

Although the present government initiated its privatization program to fund budget deficits, Mr. Junker said he expects the Greece government to do more.

Greece is due to receive a €12 billion payment on 29 June and IMF’s contribution is expected to be €3.3 billion. The payment is the fifth tranche of the IMF-EU €110 billion bailout package and is yet to receive final approval.

However, Mr. Juncker said that IMF is assuming EU will make the €3.3 billion payment if it holds up the payment. However, Germany, the Netherlands and Finland may oppose the move.

“Greece must implement the programme fully and rigorously; this is very important to correct the errors of the past”, said European Central Bank President Jean-Claude Trichet in an interview to Aachener Zeitung newspaper.

Greece has missed its target of reducing budget deficits and chances of it being able to borrow €24 billion from the markets in 2012 – as agreed under the bail-out program, is slim.

Caroline Atkinson, an IMF spokeswoman said: “We never lend when we don’t have an assurance that there will be no gap”, in a briefing in Washington.

“That is how we maintain the safety of our members’ money”, she said ruling out any further payment if Greece fails to assure of meeting next year’s financing gap.

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