IMF sounds upbeat tone on Greek rescue but warns of need for speedy resolution

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The Independent Online

The International Monetary Fund's managing director, Dominique Strauss-Kahn, yesterday said there was an urgent "need for speed" in securing a bailout for Greece.

Mr Strauss-Kahn sought to give an upbeat assessment of progress on a rescue for the stricken country, which is teetering on the brink of default with grave implications for Europe's single currency. Following a meeting with Greece's finance minister, George Papaconstantinou, he said: "The minister and I had a very constructive meeting and I am impressed with the Greek authorities' determination to take the actions necessary to put their economy back on track.

"Since we received the request for financial support last Friday, our discussions with the authorities have accelerated. The IMF, the European partners, and everyone involved in the financing effort recognises the need for speed. I am confident that we will conclude discussions in time to meet Greece's needs. We are all aware of the seriousness of the situation and the courageous efforts being made by the Greek people."

However, France and Germany yesterday vowed to take a hard line with the country amid doubts over whether a proposed €45bn (£39bn) aid package will be sufficient to stave off a default. The debt-wracked country has announced billions of euros in austerity measures, which will include tax hikes and public sector wage cuts, but will have to agree further measures to satisfy its EU partners and the IMF so that the vital aid flows. Mr Strauss-Kahn has been seeking to put a more human face on the activities of the IMF insisting that the fund was "there to help" amid an outpouring of hostility towards it in Greece.

Germany said it will aid Greece in defence of the single currency, but wants tougher rules and has told Greece that it must "get its house in order" because aid could only be seen as a "last resort" to protect the euro.

Greece's travails to some extent overshadowed the IMF's end of meeting communique, which was issued on Saturday. In it the fund said that strengthening financial regulation, supervision, and resilience remained a "critical but as yet incomplete task".

The fund has proved two new taxes to pay for future bailouts and has repeatedly urged international co-operation on reforming the banking sector. Mr Strauss-Kahn has warned that advanced economies, trying to plug loopholes in financial regulation, run the risk of creating inconsistent regulatory regimes that result in fresh problems of coordination between different countries.

He insisted that: "The rules of the game have to be almost the same or they have to be consistent."