WRAPUP 4-Greece asks for talks, closer to aid request

* Greece requests talks with EU, ECB and IMF

* Stops short of asking for emergency aid

* Greek assets rebound but bond spreads still high
(Adds comments from IMF official)

By Ingrid Melander and Michael Winfrey

ATHENS/WASHINGTON, April 15 (BestGrowthStock) – Greece asked on
Thursday for official talks with European authorities and the
International Monetary Fund, a step toward Athens obtaining
billions of euros in emergency loans.

In a letter to the European Union, the European Central
Bank and the IMF, Finance Minister George Papaconstantinou
proposed discussions on “a multi-year programme of economic

He said this “could be supported with financial assistance
from the euro-area member states and the IMF, if the Greek
authorities were to decide to request such assistance.”

The IMF announced it would send a team to Athens on Monday,
which a Greek government official said would be accompanied by
teams from the European Commission and the ECB.

Greek and IMF officials stressed that Greece, struggling to
finance a national debt greater than its annual economic
output, had still not decided whether to apply to activate an
emergency aid mechanism announced by euro zone governments last

But IMF spokeswoman Caroline Atkinson said the IMF team
would focus on Greek policies that could form a basis for

“When we’re discussing with them the policies that could
form the basis, at a certain point that could mutate into a
discussion for the (financial) arrangement,” she said. She
added the IMF could work quickly, but declined to give a

A senior IMF official, speaking on condition of anonymity,
said Greece had expressed interest during preliminary talks in
a three-year precautionary standby agreement, which it would
tap only when needed.

The official said European financing, part of a joint aid
package, would have to be assured to trigger IMF funding. The
Europeans had made it clear that IMF funding should not exceed
one-third of any total Greece package although details of
financing had not yet been discussed, the official added.

The joint IMF and European mission to Greece from Monday
should last about 15 days and any agreement would be finalized
shortly afterward by the IMF board, the official noted.

Under the aid mechanism, euro zone governments would lend
Greece up to 30 billion euros in the initial year and the IMF
would provide more money, perhaps 10 billion euros or more, in
what could be the biggest international bailout ever

Analysts said Greece, which is being forced to pay sky-high
borrowing rates in the markets and will need to refinance 8.5
billion euros of bonds maturing in May, appeared to be inching
towards seeking emergency loans.

“The fact that they are asking for clarification on various
issues about the mechanism suggests that they are seriously
considering activating the package,” said Ben May, an economist
at Capital Economics in London.

At a cabinet meeting, Greek Prime Minister George
Papandreou said his country’s debt crisis “has created
psychological terrorism in our economy and among Greek citizens
and we have to deal with that. We must ensure safety and


News of the request for talks halted a slide in Greek asset
prices on Thursday.

Greek bank stocks jumped more than 4 percent and the spread
of the 10-year Greek government bond yield over German Bunds
fell back to 4.07 percentage points, flat on the day, from an
earlier level of 4.35 points. It was still not far from the
record high during the crisis of 4.63 points, hit last week.

The markets know that even if Greece does obtain emergency
aid, it may still face several years of economic pain and
instability as austerity measures worsen its deep recession.

Euro zone governments have said they would extend
three-year emergency loans at a rate of about 5.0 percent,
cheaper than the current yield of 7.0 percent on Greek
three-year bonds. Atkinson said any IMF aid to Greece beyond
roughly 3 billion euros would carry an interest charge of 3.26

Strict conditions for Greece to slash its budget deficit
over several years would be attached to the loans.

But any decision to provide the euro zone loans would have
to be made unanimously by all 16 governments in the zone, and
markets worry that Germany, where public opinion is strongly
against helping Greece, might block or delay the aid.

EU Economic and Monetary Affairs Commissioner Olli Rehn
said on Thursday that he was confident Germany would step in to
help if needed, adding: “there will be no default” by Greece.

But billionaire financier George Soros said the euro and
the EU itself would be at risk of breaking up if Germany
refused to play its traditional role binding the region

“The Germans have always made the concessions needed to
advance the European Union, when people were looking for a
deal. Not any more,” Soros told Corriere della Sera in an
interview published on Thursday.


Euro zone finance ministers were due on Friday to start two
days of meetings in Madrid that would discuss Greece’s economic
plight, as well as ways to improve coordination of economic
policies in the zone and reduce the wide economic imbalances
that contributed to the Greek crisis.

Jean-Claude Juncker, who heads the group of finance
ministers, said the EU might have to reform its core treaty to
prevent new fiscal crises.

“We have resorted to these loans (for Greece) because there
was no other solution within the European Treaty,” Juncker was
quoted as saying by Spanish newspaper Expansion.

“For the future we will have to install a European
mechanism without allowing some member states to relax and not
balance their books.”

In an effort to improve its fund-raising by broadening its
investor base, Greece has said it intends to sell a U.S. dollar
bond and conduct a roadshow for U.S. money managers. The
markets think such a bond might raise around $2 billion or $3

Morgan Stanley will serve as lead underwriter for the
dollar bond sale, which will start with a roadshow sometime
after April 20, a source close to the deal told Reuters on
Stock Market Research Tools

(Additional reporting by Tim Heritage, Nigel Tutt, Marcin
Grajewski Marc Jones, Jan Strupczewski, Lesley Wroughton and
Emily Kaiser)
(Editing by Andrew Torchia & Theodore d’Afflisio)

WRAPUP 4-Greece asks for talks, closer to aid request