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IMF, EU Officials In Greece For Talks

(RFE/RL) -- Representatives from the European Union and International Monetary Fund (IMF) have arrived in Athens for some 10 days of talks with Greek officials over the country's financial crisis.

The high-powered EU and IMF delegations are seeking clarity on how Greece plans to put its debt-ridden economy back in order, and also finalizing arrangements for a standby loan of up to 45 billion euros ($61 million).

But beyond that, the two institutions want to be seen as lending their prestige to the beleaguered government of Prime Minister George Papandreou, to help strengthen Greece's prospects on the world financial markets.

The credibility of the EU's common currency, the euro, of which Greece is a member, is at stake. And despite the recent agreement over the massive standby loan, investors are still skeptical that Athens can pull itself out of its debt morass and avoid bankruptcy.

Comments like that of Axel Weber, a governor of the European Central Bank in Frankfurt, don't help to calm the jitters. He estimated that Greece may need as much as 80 billion euros to avoid default -- almost double the amount available in the EU-IMF standby loan.

Pressure Grows

At a sale of short-term government treasury bills on April 20, Greece easily raised almost 2 billion euros ($2.7 billion). But Athens had to pay a euro-lifetime high of 3.65 percent to attract buyers -- that's more than double the cost of similar short-term bills at the last auction in January.

After this latest treasury-bill sale, Greek Finance Minister George Papaconstantinou told journalists there was no chance that Greece would default on heavy debt repayments falling due in May.

"The sign that we have from today's auction is that we took 1.95 billion euros, and that reduces our borrowing needs for May below 10 billion euros," Papaconstantinou said. "This is very significant."

But some economists say these borrowing costs are just too high for Greece to sustain. They believe Athens will have to call on the EU-IMF standby loan sooner rather than later.

Papaconstantinou, in a reference to the purpose of the standby facility as a "last resort," said Greece would only activate the aid mechanism if market borrowing costs were too high, or if the progress of the EU-IMF talks was slow.

"Parallel to that, the fact that we have already begun these discussions, that will make it easier if it is requested, as there will be immediate activation," he added.

Meanwhile, popular discontent grows on the streets of Athens. The latest unemployment figures show joblessness rose to 11.3 percent in January, and it's expected to worsen further as a result of the government's austerity program.

State-employed doctors started a 48-hour strike today, and all public-sector workers will go on another 24-hour strike on April 22.

with agency reports