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Merkel to meet IMF chief in euro crisis flurry

Last Updated: Wednesday, January 11, 2012 - 00:28

Berlin: Ratings agency Fitch offered a ray of light for the eurozone today ahead of talks between German Chancellor Angela Merkel and IMF chief Christine Lagarde on Greece's struggle to cut its debt.

Fitch, one of three leading ratings agencies, announced it had no plans to downgrade France's top triple-A credit rating in 2012 unless the country suffered major economic shocks.

The move will come as welcome news to French President Nicholas Sarkozy, who is fighting for re-election, a day after he travelled to Berlin for his first tete-a-tete of 2012 with Merkel.

With the eurozone crisis showing little sign of abating, Merkel was due to press on with an intensive three-day diplomatic push, meeting the International Monetary Fund head at 1900 GMT.

Before Merkel, Lagarde met German Finance Minister Wolfgang Schaeuble, his ministry said. No press conferences were scheduled.

Greece, which is again in the eye of the storm as it races to reduce its debt in a bid to secure more aid, is set to focus minds ahead of a crucial assessment of its latest efforts.

Athens must ensure the "rapid implementation" of reform measures, Merkel told reporters after the talks with Sarkozy, warning that "otherwise it will not be possible to pay the next (aid) tranche to Greece.

"But this is what we want and we want Greece to remain in the eurozone," she underscored, adding that Greece would feature in her talks with Lagarde.

In a test of market sentiment, Athens paid slightly lower but still high rates to raise 1.6 billion euros (USD 2.1 billion) in six-month treasury bills, finding solid demand despite wider concerns over the Greek outlook.

Austria, by contrast, paid higher funding costs to sell four-year bonds than at the previous auction, suggesting investors were uneasy over the country's exposure to Hungary.

Budapest sought help from the IMF and EU in November after its currency, the forint, plunged, but creditors cut short initial talks over central bank reforms which they said would end the Hungarian institution's independence.

Athens is again under intense pressure after the IMF reportedly expressed growing doubts over Greece's long-term ability to reduce its massive debt mountain of 350 billion euros.

International auditors are due back in Greece next week to take stock of the country's economy after Prime Minister Lucas Papademos warned of an "uncontrolled default" in March if no further aid was forthcoming.


First Published: Wednesday, January 11, 2012 - 00:28
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