Greek Finance Minister Evangelos Venizelos delivers remarks at the Institute of International Finance (IIF) annual meeting in Washington Sept. 25, 2011.YURI GRIPAS/REUTERS
As global financial officials seek to restore confidence following last week's worldwide market plunge, Greek Finance Minister Evangelos Venizelos vowed his country will do "whatever it takes" to meet budget targets as it seeks to avoid a default that could trigger an even deeper slump.
"Greece wants to make it and will make it," Venizelos said in a speech in Washington Sunday after the annual meetings of the International Monetary Fund and the World Bank. "We are ready to take the necessary initiatives at any political cost" to improve the economy, he said.
The coming days are critical as Greece heads toward a meeting with euro-area finance ministers next Monday on whether it will receive rescue funds to pay its bills through the end of the year. The outcome will be crucial to determining whether officials can contain a debt crisis that threatens to unravel the European Union and spill over into the global financial system.
While many of the participants at the IMF meetings voiced confidence that the system could handle the problem, U.S. Treasury Secretary Timothy Geithner warned Saturday that failure to resolve the crisis threatened "cascading default, bank runs and catastrophic risk."
IMF head Christine Lagarde met with Mr. Venizelos to discuss the international agency returning to Athens this week to resume halted talks, paving the way to release the latest bailout funds.
Mr. Venizelos, also Greece's deputy prime minister, pledged to keep his country among the nations that use the euro, responding to concern that the currency union could disintegrate. At the same time, Mr. Venizelos and Greek Prime Minister George Papandreou sought to shift blame for the current crisis and pointed to what they said are broader problems in the euro zone.
Not all observers were impressed by Mr. Venizelos's comments. "He can't really say anything else, can he?" said Michael Hewson at CMC Markets in London. "I think they'll get the [bailout]money, either because Greece convinces [the IMF, the European Union and the European Central Bank]that they're serious about making the austerity cuts, or basically because, if the IMF and the EU don't give them the money, the alternative is far worse."
Global policy makershave been pressing European decision makers to take action. Bank of Canada Governor Mark Carney said European banks must move quickly to bolster their capital. He also suggested that European governments should make €1-trillion available to alleviate the debt crunch and prevent contagion.
Meanwhile, the Institute of International Finance Inc., which rallied its European members to support a July agreement on an enlarged Greek bailout, pushed back hard against suggestions that bond holders should take deeper losses than set out in this summer's pact.
"If we start to reopen that Pandora's box, we will lose a lot of time and I'm not sure people will be willing to participate," Josef Ackermann, head of the institute and also of Germany's Deutsche Bank AG, said at a press conference in Washington. "Our strong advice" is to complete the agreement made in July, he said.
Pressure on Europe from at home and overseas to fix the debt mess mounted after one of the most turbulent weeks for financial markets since the bankruptcy three years ago of Lehman Brothers Holdings Inc. Stocks, gold, silver and oil tumbled, and the Canadian dollar weakened to its lowest level in 11 months against its U.S. counterpart.
Many investors see a default by Greece as inevitable and some expect that Portugal, Ireland, Italy or Spain could be next. French banks, the largest creditors to Greece, have seen their share prices slide on speculation they'll face heavy losses, adding to concern that the European debt crisis will spill over into the global financial system.
With files from Associated Press, Bloomberg News and Reuters.