IMF chief says he is optimistic that ‘tough’ Greek gov’t plan will lift country out of crisis

IMF chief optimistic about ‘tough’ Greek plan

ZURICH — The Greek government’s plan to make drastic public savings in return for a debt bailout by other European countries is “tough” but should work, the head of the International Monetary Fund said Tuesday.

Greece promised major public sector cuts and reforms after the European Union unveiled a €750 billion ($1 trillion) plan to contain the continent’s spreading debt crisis and boost the 16-nation euro. But the austerity measures angered many in Greece and last week sparked violent protests in which three people died.

“It’s a very tough program for the Greeks but I think it’s the right way,” IMF Managing Director Dominique Strauss-Kahn told reporters in Zurich.

Speaking at the end of a one-day meeting on international monetary stability hosted by the Swiss National Bank and the IMF, Strauss-Kahn said the Greek plan was “more V-shaped than U-shaped” — meaning it would result in sharp cuts to start with but lead to an earlier recovery.

It was a “very bold decision by the government and I think it will work,” he said.

The IMF is making a €5.5 billion ($7.13 billion) loan to Greece on Wednesday as part of an EU-led bailout to hold the country’s creditors at bay and make further borrowing cheaper.

It is rare for the Washington-based fund to bail out a comparatively rich country like Greece, as it normally specializes in assisting developing nations that have fallen on hard times.

Asked what would happen if another country — some have pointed to Portugal, Spain and Italy — plunged into sudden crisis, Strauss-Kahn said the IMF would also be ready to help.

“One more, one less is not that much of a problem,” the Frenchman said.

“We’re dealing with many countries and programs and we have the resources available to do so.”

But he noted that IMF member countries, which ultimately provide the money the fund lends to ailing governments, were considering whether to increase its resources after having already pledged to triple its reserves last year.

“The question is: Will it be enough for the future?,” he said.