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Greek Elections 2012: IMF/EU Warn Next Government

Officials from the European Union and the International Monetary Fund said Sunday that Greece must adhere strictly to its austerity program–that includes taking new measures in June–signaling that there was little room for a new Greek government to renegotiate the country’s bailout terms.

Instead, more than 60% of the popular vote went to smaller left- and right-wing parties that have campaigned against the austerity program Greece must implement in exchange for continued financing from its European partners and the IMF.

“The program is the only way forward for Greece,” an EU official told Dow Jones Newswires, and added that any renegotiation of the tough targets would be “within strict boundaries, very, very limited.”

An IMF official said its representatives “will only return to Greece if the new government is ready to finalize new cost-cutting that has already been agreed.”

The IMF official said that while official-sector creditors were prepared to wait until a new government is formed in Athens, there are no thoughts of deviating from what has been agreed to with the previous government.

“If there’s no agreement on the new cost-cutting, the payments for Greece will be withheld until there is a satisfactory understanding,” he said.

He added that the IMF was open to discussing an extension of Greece’s deficit-cutting targets by a year to ease the pain of the adjustment, but added that Greece’s outgoing caretaker government previously rejected the idea. (Further reading)

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