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Portfolio > Economy & Markets

Emerging Market Nations Warn IMF on Greek Rescue

By Marlene Y. Satter

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Emerging market nations of the International Monetary Fund warned that body on Thursday not to contribute too much money to Greece’s second bailout, according to a Financial Times report.

Reuters reported that the paper cited the representatives of several “non-European economies” as having said a number of governments were “unwilling to risk financial contagion by curtailing IMF lending to Greece,” but were “alarmed at the risks the fund was taking.”

Paulo Nogueira Batista, Brazil’s IMF director and a member of the 24-member executive board that handles the IMF’s daily operations, was referred to as believing the austerity plan put in place by the Greek government was too harsh, and that the restructuring of European bank-held Greek debt was inadequate.

He was quoted in the report saying, “Greece is not having an easy time. The mostly European private creditors of Greece have had an easy time.”

Arvind Virmani, a director from India, said in the report that while the bailout handled short-term liquidity problems, it failed to do anything about long-term debt and left open the possibility of additional defaults. The Financial Times quoted him saying, “I am not convinced [the plan] addresses the basic problem of liquidity versus solvency.”

The bailout calls for an additional 109 billion euros ($155.722 billion) to come from Europe and the IMF on top of the bond exchanges, but does not specify how much the IMF will kick in. That institution has not disclosed how much it plans to contribute, although in past euro zone bailouts it put in approximately a third of the required funding.

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