Bundesbank President Frowns at IMF Role in Greece Rescue Plan

Finance | April 26, 2010, Monday // 13:38|  views

Axel Weber, president of the Deutsche Bundesbank (German Central Bank), is pictured here during a balance press conference in Frankfurt Main, Germany, 09 March 2010. Photo by EPA/BGNES

Financial aid by the International Monetary Fund to Greece would be a "very broad interpretation" of the Fund's mandate, European Central Bank Governing Council member Axel Weber told German daily Frankfurter Allgemeine Zeitung (FAZ) in an interview published Monday.

"It is problematic if the IMF becomes active beyond the financing of current account deficits in foreign currencies," Weber told the daily. That is true in general and not only for Greece, he asserted.

Weber urged a discussion about refocusing the IMF to its core mandate, namely balance of payments financing and macro-economic oversight, he said.

In other remarks, the central banker urged governments to exit from financial stimulus packages worldwide. "The IMF, which is part of the global fight against the crisis, must also become part of the global exit strategy," Weber demanded.

Greece's prime minister asked on Friday for the activation of a joint eurozone-International Monetary Fund financial rescue plan.

“It is a matter of national need to ask officially” for the activation of the EU-led aid mechanism, George Papandreou said in a televised address from the Greek island of Kastelorizo.

The rescue package will provide Greece with loans from other eurozone countries to the tune of EUR 30 B at interest rates of about 5%, and about EUR 10 B from the IMF.

Earlier last week it was confirmed that the Greek government ran up a budget deficit of EUR 32.34 B in 2009, representing 13.6% of gross domestic product (GDP) far worse than expected.

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Tags: greece, banks, banking system, Greek banks, Simeon Djankov, Eurozone, IMF, finance minister, Fitch

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