MercoPress. South Atlantic News Agency

Greece warned it must redouble efforts otherwise (but following step is not clear)

Prime Minister George Papandreou: to restructure or not to restructure

The IMF warned Greece it must redouble reform efforts to avoid derailing its fiscal program, key to dealing with a huge debt mountain.The sternest IMF warning since a 110 billion Euro EU/IMF bailout a year ago pulled the troubled Euro zone member back from the brink of bankruptcy was delivered as European officials raised the possibility of a Greek debt restructuring.

“The view that seems to be taking hold is that the government program is not working,” the IMF chief of mission to Greece, Poul Thomsen, told an economic conference in Athens.

“The program will not remain on track without a determined reinvigoration of structural reforms in the coming months. Unless we see this invigoration, I think the program will run off track,” he added.

A deep recession and persistent tax evasion have kept revenues low, threatening fiscal targets, while tension in ruling party ranks is hampering Greece's reform efforts, prompting market talk that debt restructuring is unavoidable.

Europe's top financial officials broke a taboo Tuesday and acknowledged for the first time that Greece may have to restructure its debts.

Some Greek officials have backed the idea of a “soft” restructuring, for example by extending repayments, but Prime Minister George Papandreou said late on Tuesday this would do more harm than good and pledged to redouble efforts.

“We, the Greek government, European institutions, the other euro zone countries, all continue to believe that the costs far outweigh any potential benefits,” he said