Greece insists it could seek IMF help if EU leaders fail to deliver support on debt crisis

Greece may turn to IMF if EU fails to deliver

ATHENS, Greece — Greece could seek IMF funding to help overcome its debt crisis, if its EU partners do not provide “clear support” next week, government officials said Wednesday.

“We have to keep all options open for whatever possibility,” Prime Minister George Papandreou told reporters in Brussels. “We would certainly prefer a European solution.”

EU nations have been slow to pledge concrete help for Greece and are at a March 25-26 meeting of EU leaders to consider aid from individual nations if Greece asks for help.

Papandreou said even agreeing this blueprint could encourage markets to lower the “unreasonably high interest rate which is over 6 percent” that they are charging to take on Greek debt, which they see as high risk of a default.

Government spokesman George Petalotis also said next week’s EU summit will be crucial, as the country struggles to reduce a bloated budget deficit and public debt.

“I believe the summit is when it will become evident whether the European partners want to support a country … or whether we have to resort to some other solution,” Petalotis said.

“We are making a very big effort to achieve our targets, so as to secure clear support from the European Union in order not to have to go to the International Monetary Fund,” he told Greece’s Channel 1 radio.

“But if the borrowing conditions, when we need to borrow, are not expected to be those that we want, (IMF funding) is a possibility which we certainly can follow.”

Papandreou said high borrowing costs were unethical and causing economic problems for Greece.

“We are asking people to cut wages and we are doing so and this is lost to the high interest rates we are paying,” he said.

A euro-zone member knocking on the IMF door would be unprecedented and deeply embarrassing for the 16-nation bloc.

“I believe there would be consequences for the European Union in general — consequences which no one would like to see or endure,” Petalotis said of Greece’s potential financial assistance from the IMF.

German Chancellor Angela Merkel suggested Wednesday that the euro zone should be able to eject countries that persistently disobey EU budget rules. She did not directly mention Greece.

Papandreou rejected any suggestion of Greece quitting Europe’s currency union.

“I would say there is zero possibility of leaving the euro zone,” he said.

Greece’s debt crisis emerged late last year when the country abruptly revised up its deficit figures, alarming the EU and hammering the common currency as markets feared contagion to other weak southern economies.

Under intense pressure from Brussels to sort out its finances, Athens has announced a €16 billion ($22 billion) austerity program through public sector salary cuts, pension and hiring freezes and higher consumer taxes.

The cutbacks have triggered union anger, with two major demonstrations in Athens this month degenerating into street riots. State power corporation workers launched a two-day strike Tuesday — creating minor blackouts throughout the country — while taxi drivers and gas station owners will be on strike Thursday.

AP Business Writer Aoife White in Brussels contributed to this story.