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IMF welcomes Greek action on austerity

2 July 2011 No Comment

The International Monetary Fund welcomed the Greek parliament’s passage of a tough austerity plan designed to shore up its finances and avert a debt default that could shake the euro zone.

IMF spokeswoman Caroline Atkinson said the move would “pave the way” for the release of more funds to Athens from the 110 billion euro ($149 billion) European Union-IMF rescue package for the country.

“The recent passage of the relevant legislation in Greece’s parliament will bolster Greece’s efforts to implement its economic reform program,” Atkinson said in a statement.
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“This is a welcome and important step and will contribute to restoring fiscal sustainability, safeguarding financial sector stability, and boosting competitiveness to create the conditions for sustained growth and employment.”

She said that discussions on the next stage of rescue financing were underway and “we hope for a positive resolution soon.”

Earlier Thursday, Greece approved the 28.4 billion euros ($38.61 billion) in IMF-EU-dictated austerity measures despite riots and protests in a desperate bid to avoid national bankruptcy.

The EU said Greece has now met the conditions set by the other euro currency nations to receive a blocked 12 billion euro installment from the joint bailout agreed with the IMF last year.

The plan passed includes tax rises and spending cuts expected to increase short-term economic hardship.

It comes in parallel to negotiations with private banks to restructure the country’s hundreds of billions of euros in debt to avert a default.

On Wednesday, IMF acting managing director John Lipsky rejected the term “austerity” for the plan, calling it a “structural adjustment” designed to “address in a fundamental way the basic problem of the Greek economy, which is a lack of competitiveness.”

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