IMF conditions Greek aid to agreed economic steps

WASHINGTON - The International Monetary Fund said Thursday it was prepared to continue supporting Greece as it struggles with a debt crisis as long as the government adopts agreed economic measures.

"We stand ready to continue our support for Greece subject to adoption of the economic policy reforms agreed with the Greek authorities," IMF spokeswoman Caroline Atkinson said in a statement.

"Progress is being made in the discussions to ensure the full financing of the programme, and we anticipate a positive outcome on this at the next Eurogroup meeting," she said.

Eurozone finance ministers are set to meet on Sunday and Monday in Luxembourg. A monthly meeting is scheduled on July 11 in Brussels.

Atkinson noted the conclusion of the IMF's pending programme review remained subject to approval by its executive board.

The IMF statement came as the embattled Greek prime minister, George Papandreou, appealed for unity from lawmakers in his Socialist party after two deputies quit in protest at the austerity measures.

Papandreou struggled to form a new government to spearhead a controversial wave of reforms necessary for the financial rescue.

The government is currently locked in tough negotiations with its European peers for a new bailout after a previous European Union-IMF package was deemed insufficient to get the stricken economy back on its feet.

Greece has warned it will be unable to pay next month's bills without a 12-billion-euro (US$17 billion) loan instalment from the EU and the IMF, part of a broader 110-billion-euro bailout package agreed in May 2010.

A critical vote in parliament on a controversial new austerity package worth over 28 billion euros (US$40 billion), demanded by Greece's creditors in return for the latest aid infusion, must be held by the end of the month.

A special adviser to the IMF managing director, Min Zhu, said the institution was concerned about the uncertainty in Greece as the country edges towards debt default amid swelling violent protests against the austerity measures.

"The situation changed very dramatically in the last 24 hours," he said in Paris.

"There is a lot of uncertainty... We are working extremely hard on this issue. We are ready to provide support... It's an absolutely important issue today for Greece, for Europe and for the whole global economy."