PARIS (MNI) – Now that Greece has a credible consolidation program
which should convince financial markets, it is difficult to see how the
intervention of the IMF would improve the situation, ECB Governing
Council member Christian Noyer said Wednesday.
Greece’s “very courageous” strategy to reduce its deficits, drawn
up under the auspices of the European Commission, is “entirely credible”
and the financial markets should take this into account, the governor of
the Bank of France told the Finance committee of the National Assembly.
Besides supplying countries with balance of payments problems the
hard currencies they need, the role of the IMF is to institute a program
of structural reforms that will restore credibility, Noyer explained.
This groundwork has already essentially been accomplished within
the structures of EMU and its Stability Pact, he reasoned.
The problem of Greece is that its production costs rose faster than
the EMU average and it redistributed assets it did not have, with the
result of a loss of competitiveness, Noyer explained.
“If you do that for 10 years you lose a lot” of competitiveness, he
said. “If you are in a monetary union, the only means of adjustment is
through the real [economy]” — by reducing wages and public outlays.
This is “very difficult” for the populations to support, he
conceded. “Evidently it creates more unemployment and sub-par activity.”
-Paris bureau tel.: +331 4271 5540; email: stephen@marketnews.com
[TOPICS: M$$EC$,MGX$$$,MT$$$$,M$$CR$,M$F$$$]
