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Euro falls as Greece warns it could seek IMF help

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by Kay Mitchell
Euro falls as Greece warns it could seek IMF help

The euro tumbled again today after Greek Prime Minister, George Papandreou, warned that Greece might have to seek help from the International Monetary Fund (IMF).

The currency fell to 1.3648 dollars, before recovering to 1.3692 dollars, however it was still down from 1.3735 dollars late in New York yesterday.

Today, Mr Papandreou told the EU parliament in Brussels: “This is where Europe must come in and say ‘OK in this case we either can provide what an IMF would provide … or in the end Greece may have to choose the option to go to the IMF’.”

Greece is currently taking action to reduce its public deficit from 12% to 8% of GDP this year.

The country currently has the highest debt of the 16-member euro zone, at €300 billion (£273 billion) and its economy is considered to be the euro zone’s weakest.

Its debt crisis has weakened the value of the euro, it has lost around one tenth of its value against the dollar since late 2009.

As a result, the Greek Government announced measures to cut its deficit and these include a public sector pay freeze, a hike in taxes on petrol, alcohol and tobacco and an increase to the retirement age.

Mr Papandreou is seeking assistance from fellow euro zone nations to make it cheaper to borrow funds on the international financial markets.

However, tension is growing between Greece and some of its fellow euro zone nations. Germany said euro zone nations are in serious breach of fiscal rules should be expelled from the group.

However, the European Central Bank, and other EU bodies, have already expressed their dissatisfaction that such assistance (such as the IMF) would be unwelcome.

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News posted: March 18, 2010

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