French Fin Min: Greece Poses Technical Problem For Euro-Zone

Greece’s public finance difficulties create a technical problem for the euro zone, in which countries are tightly bound together by the Stability and Growth Pact which imposes strict rules on public deficits and debt, French Finance Minister Christine Lagarde said Friday.

“This creates a technical problem because in the euro zone we are in a zone of complete monetary solidarity,” Lagarde said at a conference in Paris.

Therefore, euro-zone members, the European Central Bank and the European Commission expect Greece to stick to its commitment to reduce its debt and repair its public finances, Lagarde said.

“The Greek government is committed to respecting its pledges,” the French finance minister said, adding that she hopes Greece won’t need help from the European Investment Bank.

Lagarde’s comments echo those of German Chancellor Angela Merkel, who hinted Thursday that healthier members of the euro zone aren’t prepared to abandon Greece and other heavily indebted countries in the currency bloc.

“What happens in a member country influences all the others, particularly when you have a common currency,” Merkel said.

The French finance minister said Greece’s problem underscored the severe strain the global economic crisis has placed on the Stability and Growth Pact.

“The crisis has posed a serious challenge to the European stability pact, but euro-zone countries have demonstrated their commitment to it…The issue is whether or not it is necessary to coordinate our economic policies even more than they are coordinated now.”

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