IMF’s Strauss-Kahn says Greek debt problems unlikely to spread

In an interview with Reuters in the Kenyan capital, Nairobi, Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering. “You can add to the list all of the countries in the Eurozone, to try to scare people about everything. I don’t think it will happen,” he said. “We have a problem with Greece. We don’t have a problem with Spain to date. The eurozone has to deal with the Greek problem. They are doing this. No one knows what’s going to happen tomorrow morning but there’s no reason why the spillover to Portugal or to Spain will take place.”

Separately, Strauss-Kahn, who is on a tour of Kenya, South Africa and Zambia to see how the poorest continent has bounced back from last year’s global economic crisis, said he was confident eurozone countries could handle the Greek debt maelstrom. Greek Prime Minister George Papandreou said last week he might have to go to the IMF to meet debt obligations falling due in April if the European Union did not help with funds. It would be the first bailout in the history of the euro. However, Strauss-Kahn said he did not think IMF involvement would be needed beyond the current levels of technical assistance offered and accepted by Athens. “The eurozone wants to deal with the problem itself and I can understand this,” he said.

Dominique Strauss-Kahn Portugal uses privatizations to drive down debt Portugal’s finance minister says he aims to raise ¤6 billion ($8.2 billion) from privatizations to help pay off the country’s heavy debt load. Finance Minister Fernando Teixeira dos Santos hopes the sell-off over the next four years will bring revenue equivalent to 3.6 percent of Portugal gross domestic product. He also wants to keep annual pay hikes for government employees below the rate of inflation, trim welfare benefits and scrap some tax breaks as part of a four-year austerity plan. Teixeira dos Santos announced the measures Monday. Portugal’s budget deficit is projected to have hit a record 9.3 percent of gross domestic product last year, prompting fears it could face similar problems to Greece.

Papandreou received political support this week but no promise of any specific financial aid at talks with Chancellor Angela Merkel in Berlin and with Eurogroup chairman Jean-Claude Juncker in Luxembourg. French President Nicolas Sarkozy made clear he was ready to help if Greece’s financial situation were to deteriorate. Athens needs to borrow 53 billion euros this year -- at least 20 billion of it by the end of May -- to repay existing debt and cover its huge budget deficit.

Greece won’t need aid, central bank chief tells paper

Greece will not need foreign help to deal with its debt problems, central bank governor George Provopoulos said in a German newspaper interview released on Monday.

Provopoulos told the Financial Times Deutschland (FTD) that solid demand for a 10-year, 5.0 billion euro ($6.8 billion) bond Greece sold last Thursday showed Athens could raise the funds it needs on financial markets. The order book for the bond issue closed in excess of 16 billion euros with over 400 investors involved. Greece had to pay a “rather high” price to sell the bonds, Provopoulos said, but he was confident the issuance costs would ease. Should Greece need foreign help, Provopoulos opposed the idea of going to the International Monetary Fund. “Greece is part of the euro family and if help were necessary, that should be the euro zone’s job,” he said. French President Nicolas Sarkozy promised Greece on Sunday that euro zone countries would help it overcome its financial problems.

EU Commission ready to propose rescue fund

The European Union’s executive is considering a new rescue fund for euro zone countries to prevent future financial crises like that in Greece, a spokesman said on Monday.

“Basically the (European) Commission is ready to propose such a European instrument for assistance which will require the support of all euro area member states,” Commission spokesman Amadeu Altafaj told a daily news briefing. “There is a clear sense of determination to improve economic governance of the euro area.” The idea of creating a European monetary fund was floated at the weekend by German Finance Minister Wolfgang Schaeuble, who said he favoured a body that commanded “the experience of the International Monetary Fund and similar executive powers”.

Meanwhile, the European Union’s executive is set to discuss possible ways to dampen speculation on sovereign credit default swap markets when it meets with the bloc’s finance ministers next week, two sources familiar with the situation said on Monday.

France, Germany and Greece have called for curbs on speculative trading in CDS, which they blame for volatility in underling Greek debt. “The European Commission may bring forward an initiative at the 16 March Ecofin,” an EU diplomat said.