ZURCIH (MNI) – The package put together to address the Greek fiscal
crisis will prove sufficient to resolve the country’s problem,
International Monetary Fund Managing Director Dominique Strauss-Kahn
said Tuesday.

Speaking to the press at a briefing on the margins of a Swiss
National Bank conference, Strauss-Kahn observed that “the history of the
IMF is that…in almost all cases the program set up by the IMF make it
possible for the country to repay” loans.

“So I have no doubt that” the current plan hatched by the IMF, EU
and European Central Bank along with the Greek authorities “is a program
that will put Greece out of its problem,” Strauss-Kahn said.

Describing the Greek austerity measures as “very, very painful but
necessary,” Strauss-Kahn called himself “confident — it will take some
time — that demand will pick up in Greece” and improve economic
developments there to the point that the country will be able to repay
loans and emerge from the crisis.

Increasing global demand will also help, he said.

In any case, the IMF chief asserted, Greece’s inability to resort
to its traditional, pre-euro policy of currency devaluation means that
“what has been decided by the Greek government is, I think, the only
solution they have.”

Asked whether global resources would permit the bailout of any
other country needing such assistance, Strauss-Kahn assured that “we
have the resources available.”

Turning to the measures announced early Monday by the ECB to keep
the euro stable, he affirmed that despite its weakness today “the
market has rather well responded to the plan.” Markets “clearly
understand” the solidarity of the eurozone, he said.

Indeed, Strauss-Kahn noted, “the solidarity among the countries in
the Eurozone is strong enough to provide a large part of the resources
that are needed by Greece,” so that the IMF need only come up with a
relatively small share.

Therefore, “contrary to what happened in Hungary” when it received
IMF assistance, the Greek plan is “mainly a European program that we are
happy to support and to help,” he said.

As to how much of a role currency trading has played in the current
situation, Strauss-Kahn said the answer to that question is “very
difficult” since “it depends upon the circumstances.”

Pressed later about financial speculation, he conceded that “there
is some speculation if we call speculation the fact that some economic
agents try to take advantage of some expectation that they have.”

However, he noted that this always exists even if it is more
evident in times of crisis. It is important to “fight against” this,
Strauss-Kahn said, in particular by rebuilding Greece “so all those who
have bets against” the country “will lose their time and maybe their
money.”

–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com

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