Who is afraid of the IMF? The Greeks (News Feature)

By Christine Pirovolakis Apr 16, 2010, 12:05 GMT

Athens - For Greeks like Giannis Stournaras, news that his country is preparing to activate an emergency aid plan to finance the regions biggest shortfall has come as a blow, not as a relief.

Having already worked 30-years at the National Bank of Greece, the 46-year-old teller is supposed to retire in five years time.

But news that the country will soon tap into billions in emergency loans will likely change all that under the hawkish eye of the International Monetary Fund and European Union.

'We are doomed because if they resort to this aid then this will mean tougher measures for us and in my case no pension until much later in life,' said Stournaras.

Greece on Thursday requested talks with the European Union, the European Central Bank and the International Monetary Fund, seen as a first step toward Athens obtaining emergency loans.

With an estimated 30 billion euros in the first year from bilateral loans from euro zone states and another 10-15 billion expected from the IMF, the package would be the biggest multilateral bailout ever attempted.

European officials have said strict conditions for Greece to slash his debt over several years would be attached to the loans.

Speaking before parliament, Greek Prime Minister George Papandreou said that although Greece is preparing to activate the IMF/EU aid plan if needed, it does not mean that the country is bankrupt.

'The IMF is already involved in the process of monitoring Greece ... and its involvement does not mean that the country is bankrupt.'

Athens, which is being forced to pay soaring borrowing costs in the markets, will need to refinance 11 billion euros of bonds maturing in May, out of a total borrowing need of 54 billion euros in 2010.

Finance experts from the European Union's executive and the IMF are sending teams to Athens on Monday to pursue discussions with Greek authorities on policies that could form a basis for loans.

Discussions are expected to last for about two weeks and any European financing, part of the joint aid package, would have to be assured to trigger IMF funding.

Any decision to provide the euro zone loans would have to be made unanimously by all 16 government in the zone, and reports say Germany, where public opinion is strongly against helping Greece, might block or delay the aid.

Papandreou said he would have preferred the aid package to have been entirely a EU solution.

'Could it have been more European? Yes, it could have been ... the involvement of the IMF resulted from a EU decision and the persistence of certain interests,' the prime minister said.

Athens has still not decided whether to apply to activate the emergency aid mechanism and the upcoming talks are necessary to nail down the final details of how a rescue could be mounted, if it were ever needed.

'What we have now is a one pager and that is not enough and we need to dot the 'i's' and cross the 't's' and to hammer out the conditionality terms of the deal,' a senior finance ministry official told the German Press Agency (dpa).

The IMF has never rescued a eurozone member and across the ancient capital many Greeks fear that if the IMF were called in it would result in labour cuts, unemployment, soaring inflation, placing a cap on pension payments and postponing social benefits.

News that Greece is closer to the aid request was reported negatively by the press.

'Good morning IMF - Good night to our pensions,' read the headline in the Greek daily Apogevmatini newspaper while newspaper 'Eleftheros Typos' ran its front page with the headline 'The keys of the country are being handed over to the IMF.'

The Socialist government has already cut public sector incomes and frozen pensions as part of its austerity programme. It has also hiked taxes to try to slash 8 billion euros off a budget shortfall that accounted for 12.9 per cent of the country's GDP last year.

The majority of Greeks believe the measures are unfair because it targets lower-earners the most and worry that the IMF will demand stricter measures in the next few years which will bring about social unrest.

'Things will get worse, especially in 2011 - I believe that the IMF will be satisfied with the measures the government has already taken for this year but it will demand more next year,' said 34-year- old gym instructor Andreas Kotsovos.

The prime minister says only drastic reforms can turn the country around.

'Yes the measures hut but can you imagine what would have happened if we had entered a state of bankruptcy and if we had not been able to borrow,' said Papandreou, adding 'that this would have primarily hurt the average Greek.'