The IMF warned Greece on Wednesday that a drive to shore up its troubled finances would fail unless Athens redoubled its reform efforts, and the ECB hit back at suggestions a debt restructuring might be the solution. European finance ministers broke a taboo this week and acknowledged for the first time that some form of restructuring might be required to ease Greece's debt burden, which at 150 percent of annual output is among the highest in the world.
-- Athens appoints advisers for 15 privatisation projects
They have said they could ask private creditors to agree to extend the maturities of their Greek debt but have also made clear that their first priority is ensuring Prime Minister George Papandreou's government steps up reforms. "The programme will not remain on track without a determined reinvigoration of structural reforms in the coming months," Poul Thomsen, an International Monetary Fund envoy who arrived in Greece last week to assess its progress in meeting fiscal targets linked to its EU/IMF bailout.
"Unless we see this invigoration, I think the programme will run off track," he said, using some of the strongest language since Greece sealed the 110 billion euro rescue one year ago. After Thomsen spoke, Greek Finance Minister George Papaconstantinou vowed to press ahead with budget consolidation efforts. He raised the prospect of firing some public sector employees and said the government would seek talks with the opposition to discuss ways out of the crisis.
Facing a third straight year of recession, Papandreou's government is struggling to rein in rampant tax dodging and has come under pressure to sell off tens of billions of euros in state assets to plug gaping budget holes. Under its rescue terms, Athens was to cut its deficit to 7.6 percent of GDP this year. Without further measures, Thomsen said, Athens would not be able to get it much below 10 percent.
Concerns about Greek debt pushed the euro below $1.42 and sent the risk premiums on Greek 10-year bonds to their highest level in a week. The cost of insuring government debt against default also rose. Euro zone ministers have not spelled out how what they refer to as a "reprofiling" of Greek debt would work. Convincing private holders of Greek bonds to voluntarily accept later repayment could be difficult and require costly guarantees to avoid a hit to banks.
On Wednesday, Athens appointed advisers for 15 privatisation projects including the sale of its 34 percent stake in Europe's biggest betting company OPAP. Deutsche Bank and National Bank will advise on the sale of the stake, worth about 1.5 billion euros at current market prices.
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