Greek crisis tops world financial agenda

Financial leaders at a weekend conference focused on the deepening Greek debt crisis and pledged to address risks posed to the global economic recovery by countries with severe budget deficits.

Greek Finance Minister George Papaconstantinou continued intense talks with IMF and European Union officials on a multibillion dollar rescue package to meet his country’s massive debt obligations. Parallel negotiations are under way in Athens.

Mr Papaconstantinou is scheduled to meet today with Dominique Strauss-Khan, the head of the International Monetary Fund.

“The Greek citizens shouldn’t fear the IMF, we are there to try to help them,” said Mr Strauss-Kahn, a former Socialist finance minister of France.

Greece is hoping to obtain loans of about US$40bn from the group of 16 Eurozone countries and an additional US$13.4bn from the IMF.

Greece on Friday made a formal request for the aid and Prime Minister George Papandreou declared in a televised address that his country’s economy was a “sinking ship”.

US Treasury Secretary Timothy Geithner urged the Greek government, European officials and the IMF to “move quickly to put in place a package of strong reforms and substantial concrete financial support”.

European and IMF officials, however, made clear that their support will require Greece to put its fiscal house in order.

Greece already agreed to begin an austerity programme that cuts civil servants’ pay, freezes pensions and raises taxes. But the country faces years of painful cutbacks and the austerity programme already generated massive street protests in Greece and labour strikes.

Canadian Finance Minister Jim Flaherty said that finance officials from some European expressed concerns that the size of a rescue program for Greece may not be sufficient.

“There is a concern about making sure that the package is enough so that it’s a one-time event,” he told reporters.