Financial Times
May 16, 2011
Greece has lost an important political ally with the sidelining of Dominique Strauss-Kahn as it pleads for more financial assistance from European partners to avoid an early restructuring of its debt.
The arrest on Sunday of the International Monetary Fund managing director, who backed Greece’s request earlier this year for an extension of its €110bn bail-out loan, “removes some lingering Greek hopes of favourable treatment”, said one analyst in Athens.
Juergen Stark, a member of the executive board of the European Central Bank, warned at the weekend that Greece had “to intensify its savings efforts to meet conditions for the payment of the next loan tranche” – a €12bn disbursement due to be paid next month.
George Papaconstantinou, finance minister, was due to outline a new four-year programme of fiscal and structural measures at Monday’s meeting of eurozone finance ministers, which Mr Strauss-Kahn had been expected to attend.
His fresh commitment to implementing reform comes as Greece seeks a further €50bn-€60bn loan from its partners while it tries to put its public finances back on track and raise funds from privatisation to reduce debt.
Athens has benefited from Mr Strauss-Kahn’s support in the past, for example, when the government came under pressure from German officials over the terms of its bail-out last year by eurozone partners and the IMF, said a Greek official.
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