IMF urges joint action on euro zone crisis

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IMF urges joint action on euro zone crisis

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The International Monetary Fund has said the European Central Bank can afford to wait before putting up interest rates and urged broad-based action to combat the euro zone debt crisis.

Unveiling its latest economic outlook for Europe, the fund said “unrelenting” reform efforts from Greece and other euro zone periphery states are necessary to stop the problem spreading.

The IMF’s economists believe the euro zone will expand by just 1.6 percent this year and 1.8 percent in 2012 – far weaker than the US but ahead of earthquake-hit Japan in 2011.

IMF European Department Director Antonio Borges was upbeat: “We are very happy to see that Europe is growing. There is widespread growth, not extraordinarily rapid growth, but still solid: of course there are problems that we all know of in some of the periphery countries.”

Borges said the IMF believed that Greece was not bankrupt despite its high debts and confirmed that no talks are currently taking place on a new aid package.

If Greece wants more support it would have to take the initiative Borges said and he added the IMF stands ready to provide more aid for Greece.

The austerity-dependent programme for Greece was “probably the best thing that can happen” to the country, though there was always the question of whether it was too ambitious, Borges said.

“We want the current programme to succeed…The future of the current programme is number one dependent on the Greek government. They have to remain committed to it and continue implementing it.”

“And then we have to find in the next couple of years the appropriate financing,” he said.