Ex-minister: Greece urged to seek IMF aid in 2004

AP News
Posted: Apr 07, 2011 9:50 AM
Ex-minister: Greece urged to seek IMF aid in 2004

Debt-crippled Greece was urged by its European partners to seek aid from the International Monetary Fund as early as 2004, but its conservative government procrastinated so it could extend its political survival, a former finance minister said.

In an interview published Thursday, former minister George Alogoskoufis said that former Prime Minister Costas Karamanlis was aware of his nation's dire economic situation. His comments came amid the latest Greek strike against austerity measures, this one by journalists.

"Karamanlis knew, saw the situation and made efforts," Alogoskoufis was quoted as telling the To Vima newspaper. "But he was under political pressure. You see, he had a slender majority in Parliament. He simply told me: 'leave it for later.' He was fully aware of exactly what was happening in the economy."

After the current Socialists swept to power in late 2009, Greece's finances rapidly collapsed amid revelations of years of wildly inaccurate data reporting, a runaway deficit and public debt. Dizzy interest rates combined with repeated downgrades of the country's creditworthiness forced Prime Minister George Papandreou to seek an international bailout in May 2010.

The euro110 billion ($157 billion) EU and IMF rescue loans are intended to keep Greece solvent until mid-2013, but, despite government protestations, many analysts expect some kind eventual debt restructuring. In return for the bailout, the Socialists passed harsh austerity measures, slashing pensions and civil service salaries while raising taxes and retirement ages amid a recession and growing unemployment.

Alogoskoufis, a professor of economics who held the finance portfolio from 2004-2009, said the conservatives inherited the country's finances in a bad shape from the Socialists _ a charge the current government reciprocates.

The Socialists' austerity package has been met with frequent demonstrations and strikes by everyone from lawyers and doctors to bakers and port workers. On Thursday, Greek journalists walked off the job for four days to protest job and pay cuts.

Until early Monday, no television or radio news programs are to be broadcast, news websites will not be updated. No newspapers or magazines will be published until Tuesday.

EU and IMF officials are in Athens to review the country's adherence to the conditions for its bailout and its implementation of austerity measures.

Greece has pledged to reduce its deficit from 15.4 percent of gross domestic product in 2009 to below the 3 percent eurozone limit by 2014. However, it has been slipping from some of its targets under the bailout plan, with particular problems in collecting revenue like taxes.

Finance Minister George Papaconstantinou has said deficit figures for 2010, to be announced April 26, are likely to be higher than the 9.4 percent of GDP officially predicted. Media estimates have put it as high as 10.6 percent.