Greece: Will Ask for IMF Help If EU Fails

Greek Prime Minister George Papandreou addresses the media at the European Commission headquarters in Brussels, Wednesday, March 17, 2010. (AP Photo/Yves Logghe)

(AP)

Greece warned Thursday that it will be forced to turn to the International Monetary Fund if the EU can't agree to a bailout plan next week that will help reduce its market borrowing rates.

Greece is paying a high price to sell bonds because investors fear its massive budget gap this year could cause it to default on debt payments. It needs to borrow some euro54 billion ($74 billion) this year and euro20 billion of that in April and May.

Prime Minister George Papandreou said he expects European Union leaders to decide at a March 25-26 summit on a blueprint of aid from the 16 eurozone countries.

He said he wasn't asking for money but a clear mechanism for financial help in case Greece can't afford to borrow from markets.

"That alone would be enough to make sure that the speculators would be warned off," he said. "I think it's an opportunity to make a decision next week at the summit."

He said an EU failure to agree any plan would force Greece to go to the IMF, although hopefully "that will not be necessary."

Papandreou said going to the IMF, which imposes austerity measures on governments in return for financial aid, would not hurt his country because Greece has already followed IMF advice and made the painful spending cuts.

"They will ask us for nothing more," said Papandreou of the IMF.

An IMF bailout for Greece would be a huge embarrassment for the 16-country eurozone and proof that the structural flaws that surfaced during the debt crisis are beyond the nations' control.

It would also make the IMF the final judge of whether Greece was doing enough to get its economy on track. Currently, such decisions are made jointly by eurozone governments on the advice of the EU's executive commission.

EU spokesman Amadeu Altafaj Tardio said it was "only normal that the prime minister of a country should not rule out any options."

"Having said that, of course we hope that the European council will have fruitful discussions," he said of leaders' talks next week.