IMF on standby to aid Greece over debt crisis

The International Monetary Fund (IMF) "stands ready" to help Greece with its debt crisis, a senior official said yesterday.

John Lipsky, the first deputy managing director of the IMF, said the fund is in "ongoing contact" with the Greek authorities following a "scoping mission" to assess the possibilities.

"The IMF stands ready to support Greece in any way we can," Mr Lipsky said. "It is a matter for the Greek authorities to decide, in collaboration with the European Union, but we are here to help if we are wanted."

The comments came against the background of Athens' borrowing costs hitting the highest levels since Greece joined the eurozone in 2001.

Greece's problems began in October, when the newly elected government discovered a deficit at 12.7 per cent of GDP, more than twice its predecessor's estimate. The country's creditworthiness was downgraded by all three major ratings agencies in December and last week the Prime Minister, George Papandreou, said the country faced an "unprecedented crisis".

Despite Athens plans to cut the deficit to below 3 per cent by the end of 2012, doubts are growing about the government's ability to get the spiralling debt under control. Next week, the European Commission will issue its own recommendations and set a deadline for dealing with the deficit, to be endorsed by EU finance ministers later in the month.

Earlier this week, investors showed unexpected appetite for Greek debt when the market responded with €25bn-worth of demand for its issue of €5bn-worth of five-year bonds, allowing the government to raise the issue to €8bn.