Page last updated at 11:47 GMT, Tuesday, 12 January 2010

Greece set for IMF visit to help economy

By Malcolm Brabant
BBC News, Athens

People walking past a closed shop in Athens
Greece has seen debt levels rise sharply

Officials of the International Monetary Fund are to visit Greece this week to help the government as it struggles to restore the country's battered economy.

Finance Ministry officials in Athens said they asked the IMF for assistance.

The publicity machine of Greece's new socialist government denied the visit of the IMF officials was the prelude to a bail-out.

The Greeks say they asked the IMF to visit Athens simply to provide technical assistance.

They say they want advice on how to create a new taxation system and the so-called Stability and Growth plan, which is designed to make the economy compliant with eurozone rules.

Euro challenge

The IMF has described Greece as a member with good standing. But it has been reported that even the IMF's limited involvement is highly sensitive because of market speculation that, despite Greece's protestations to the contrary, it may ultimately require an international bail-out.

In confirmation hearings, Olli Rehn, the incoming European Commissioner for economic affairs, acknowledged that Greece's troubles represented a very serious challenge to the euro.

He rejected the idea of punishing countries such as Portugal, Ireland, Italy, Spain and Greece, which together account for 40% of the eurozone's debt and are mainly responsible for the currency's recent weak performance on the money markets.

Mr Rehn said he preferred using what he called incentives and broader surveillance to keep states under control.

All of this international scrutiny may be embarrassing for the Greek government, but at the same time it is helping them put the case at home that there is no alternative but to accept austerity measures.

As the Prime Minister George Papandreou keeps saying, the country either changes or sinks.

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