IMF believes Greek rescue program will work

The International Monetary Fund is confident its emergency bailout program for Greece will succeed, despite a three notch downgrade by Moody?s, according to a senior IMF official said.

“We are confident that Greece will succeed, that the Greek debt is sustainable, and that our program will be successful,» said Antonio Borges, head of the IMF’s European Department, told Dow Jones in Washington late on Monday.

“This is not the first one, and probably not the last one,» he said of Greece’s downgrade.

Given that the Greek program is still in its early stages, ‘miracles’ shouldn’t be immediately expected, particularly given the political difficulties of enacting all of the program’s considerable economic restructuring conditions, he said.

“We are probably at the moment when economic consequences are more difficult to accept and people become more sceptical,» Borges said. «But this is a long-term program; we’ll have to be a little patient and wait.”

He said even with significant progress in the financial system, the IMF needed to ensure that the Greek banking system remains strong, «so that it continues providing finance to the economy.”

On Monday, Moody?s slashed Greece’s debt rating three notches amid worries that the country will end up having to restructure its massive debts, pushing Greek bonds deeper into junk territory.

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