–Must Be Satisfied Greek Plan ‘Up to Scratch’
–Will Decide With Greek Govt Whether Financing Needed
–2nd Review Of Iceland Economic Policies To Go Before IMF Board Friday

By Brai Odion-Esene

WASHINGTON (MNI) – For the International Monetary Fund to get
involved in any financial assistance program with Greece, it needs to be
assured the adjustment plan is “appropriate and realistic and adequately
financed,” a fund spokeswoman said Thursday.

Though the government has not formally requested aid, there will be
two key elements in the financial aid discussions the IMF has with
Greece, IMF External Relations Director Caroline Atkinson told
reporters.

“One is determining the amount of financing that is needed … and
the other is determining which policies are needed in order to achieve
the balance of financing and adjustment that we reach agreement on with
the authorities,” she said.

Speaking at the IMF’s biweekly press briefing, Atkinson said when
the IMF holds policy discussions with a country, it has to be satisfied
that the program — as well as the financing and policies — “are all
technically up to scratch in our view.”

IMF Managing Director Dominique Strauss-Kahn announced Thursday the
fund will send a mission to Athens Monday to discuss steps towards a
possible financial aid package. Greece Finance Minister George
Papaconstantinou earlier in the day sent a letter to top officials in
Europe and the Fund, requesting aid talks.

The arrival of the IMF team in Athens will be the first time the
fund will be engaging in aid discussions with Greece, Atkinson said. IMF
staff will assess recent as well as prospective developments in and
decide with the Greek authorities if there is a need for financing, the
size of any aid, the time period and how it will be implemented.

“We … are not in a position to give an amount that we would be
recommending,” she said, as that is a decision to be made by the IMF
board. IMF management and staff will recommend an amount based on the
discussions in Athens.

Greece also requested meetings with the EU Commission as well as
the European Central Bank, and Atkinson said the fund will work closely
with and coordinate its actions with all parties.

“We will all be working together,” she said.

Atkinson stressed Greece has not made a request for financial aid
from the IMF, rather the letter asked for discussions on a multi-year
program of economic policies.

“This is the first time that the Greek authorities have invited us
to discuss their policies with them,” she said, and this could then form
the basis of a multi-year program for Greece that could be supported by
financial assistance.

Atkinson said any program crafted by the IMF will have to be
presented to its executive board for approval, and will be worked out in
conjunction with the policies Greece agrees to with other EMU states,
the EU Commission and the ECB.

As with any IMF financing agreement, once there is an agreement on
a policy package, there will be a letter of intent from Greece to the
fund that sums up the commitments, their policies, requests for aid and
how they intend to finance the program.

The IMF will work quickly once discussions with Greece begin,
Atkinson said, but she would not provide a timeframe for an agreement.

“It depends what the situation is … what measures are needed,”
she said.

Looking at other countries with struggles of their own, there is
some positive news for Iceland. Atkinson said the second review of
island nation’s economic program is set to go before the IMF board
Friday.

At the start of April, the IMF had announced its staff would
complete a second review of Iceland “in the coming days,” after which
its executive board would then have to consider if Iceland has met the
conditions needed for the review.

The IMF had agreed to loan more than $2 billion to Iceland after
its large banks went under in 2008, leading to a collapse in the
currency and a deep recession.

Initial payments under the IMF program were made, but an impasse
over the terms under which Iceland is to repay about $5 billion to the
UK and the Netherlands for compensating overseas savers who lost money
in Icelandic accounts has delayed further aid.

“The fact that management has decided to put the review to the
board at least suggests that management and staff are satisfied that
financing has been reached,” Atkinson said.

But, she added, that is a conclusion that the board itself will
have to determine Friday, and an announcement will be made as soon as
possible.

** Market News International Washington Bureau: 202-371-2121 **

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