IMF Greece bailout likely

GERMANY is moving towards supporting a joint International Monetary Fund (IMF) and EU bailout for Greece should the country need help with its debt refinancing.

In a dramatic U-turn set to put Germany on a collison path with its European peers, chancellor Angela Merkel said she was open to financial participation with the Washington-based IMF fund.

Merkel is believed to be concerned that helping Greece would violate a “no bailout” clause in EU rules exposing it to potential legal challenges. However, the European Central Bank has warned against IMF involvement due to fears by muscling in on Greece, the US could undermine the EU’s independence.

Greek Prime Minister George Papandreou said yesterday that he wanted to solve the country’s debt crisis on his own through budget cuts.

Earlier this month the Greek government outlined measures the country would take in a bid to raise €4.8bn (£4.3bn) to help with its crippling debt pile. These include a 30 per cent annual reduction in civil servant annual bonuses and a two per cent VAT hike.

Eurozone leaders have until next week’s European Union summit in Brussels to come up with a plan.