'No doubt' that EU package for Greece would work: IMF chief

11th May 2010, Comments 0 comments

IMF chief Dominique Strauss-Kahn said Tuesday he had "no doubt" that an EU bailout package for Greece would help the country address its fiscal problems and set it back on a path for growth.

"I have no doubt the programme that has been built by the Europeans with our support for Greece is a programme that would put Greece out of trouble," said Strauss-Kahn in Zurich, where he was attending a conference on the international monetary system.

"It's a very difficult programme, a very tough programme for the Greeks, but it is the right way to go back on track," he added.

Under the programme, Greece has agreed to undertake what Strauss-Kahn described as "very very painful but necessary cuts."

There is concern that the draconian cuts, worth around 30 billion euros in tax hikes and spending cuts, could plunge the recession-hit Greek economy into deeper trouble, stifling demand and dampening productive initiative.

But Strauss-Kahn said that demand would stem from "global recovery, which is sooner and faster than expected" as well as the restoration of competitiveness in Greece thanks to the austerity measures.

"I'm confident that it will take some time, but the demand will pick up in Greece," he said.

"It will make it possible for Greece to get out of this very difficult situation," he added, praising the Greek government for taking a "very courageous, very bold decision."

"I think it will work," he added.

The austerity measures planned by the government would reduce a public deficit that reached some 14 percent of gross domestic product last year to below the EU-mandated three percent limit by 2014.

© 2010 AFP

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