ECONOMY

ECB offers Athens needed support

European Central Bank President Jean-Claude Trichet said he’s confident Greece can get its budget deficit under control, describing additional measures announced by the government this week as being «in the right» direction. «We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal» of cutting the deficit to below the European Union’s limit, Trichet told reporters in Frankfurt yesterday. Trichet’s comments on Greece contrast with the tougher tone adopted last month, when he said the nation can’t expect any «special treatment» from the EU. While the Greek government has since unveiled a plan to cut its deficit, the yield on two-year government bonds has jumped to the highest in almost a decade, signaling that investors are skeptical it will achieve the goal. The yield on the Greek two-year bond was little changed at 6.408 percent yesterday, while its German equivalent was also little changed at 1.068 percent. The euro slipped more than half a cent to $1.3784 after Trichet’s comments. The government, which plans to slash the budget deficit from 12.7 percent of gross domestic product to below the EU’s 3 percent limit in 2012, said on Tuesday it will hike fuel taxes, freeze public sector wages and increase the retirement age as part of broader efforts to improve its fiscal health. Trichet said the additional proposals «are steps in the right direction.» Meanwhile, the International Monetary Fund reiterated yesterday it stands ready to help Greece but understands that other members of the eurozone currency bloc want to resolve the matter among themselves. «If I’m asked to step in, we’ll do it but I completely understand the Europeans who want to try to resolve the problem among themselves,» IMF Managing Director Dominique Strauss-Kahn told France’s RTL radio, without elaborating. Greece’s debt woes haven’t weakened the eurozone overall, Strauss-Kahn added.