Europe can help out cash-strapped Greece without IMF: Brussels

(STRASBOURG) - The European Commission on Tuesday urged European leaders to offer clear support" for Greece in return for real efforts from Athens to resolve its budget crisis, ruling out the need for IMF help.

"We don't need to call in the IMF," EU Economic Affairs Commissioner Joaquin Almunia told the European parliament in Strasbourg.

He said he hoped an emergency economic EU summit in Brussels Thursday would offer "clear support" for Greece "in exchange for clear commitment (from the Greek authorities) that they will meet their responsibilities.

"You don't get support for free," he stressed, but "in exchange for clear commitment (by the Greek authorities) ... that they will meet their responsibilities."

The markets have been wondering for weeks whether the EU will offer Greece financial aid in order to protect the eurozone as a whole.

Germany, the eurozone's biggest economy, is preparing an aid plan to help Greece resolve its massive debt problems, the Financial Times Deutschland reported.

In its Wednesday edition, the newspaper said German Finance Minister Wolfgang Schaeuble was working on both a bilateral basis and at the European level on putting together a package to help Athens.

Almunia warned that Greece's fiscal crisis poses a serious risk to the rest of the 16-nation eurozone.

The Greek situation is a "matter of common concern for the eurozone and the EU as a whole," he said, stressing that serious and persistent internal and external imbalance "threatens stability" in the country.

This in turn presents a "serious risk of spillover into other parts of the euro area."

Greece's under-fire Socialist government is struggling to slash a debt mountain expected to hit over 290 billion euros (396 billion dollars) this year.

The Greek labour minister said Tuesday he would raise the average rate of retirement by two years to 63 by 2015 as part of a series of measures to clean up its indebted public sector.

The moves are aimed at taming the country's massive debt and a runaway public deficit equal to 12.7 percent total economic output, which have shaken the euro and put pressure on Greek fund raising efforts.

EU Commissioner Almunia insisted that recourse to the International Monetary Fund could and should be avoided.

"If we have appropriate levels of coordination, if we've got political commitment, if we use the instruments that we have available ... we do have more than enough instruments to do what's needed," he said.

But Swedish Finance Minister Anders Borg maintained that discussion of an IMF role in resolving Greece's debt crisis should not be ruled out.

Speaking in Paris after meeting French counterpart Christine Lagarde, Borg said "discussing the role for the IMF in dealing with the situation shouldn't be taboo," one of his spokeswomen told AFP.

"Greece has taken a first step toward restoring public finances and rebuilding market confidence but much more remains before confidence is restored," he told Sweden-based journalists in a telephone conference.

The IMF said last week that a Greek government austerity package aimed at restoring the country's financial health was "appropriate."

The measures include a public salary freeze, an increase in petrol taxes and a hike in the retirement age.

The 27 EU heads of state and government will meet in Brussels on Thursday for a crisis summit, with the Greek budget crisis expected to be to the fore.

Almunia said he would like EU states to make "a clear demand on all member states, starting with Greece, that they fulfill their obligations and put into practice the measures they have promised to adopt on economic and monetary issues."