Washington: John Lipsky, the No 2 official at the International Monetary Fund (IMF), said it's not possible for Greece to leave the euro zone if it fails to narrow its budget deficit, as a German lawmaker has suggested.
"That's certainly not on the table," Lipsky, the IMF's first deputy managing director, said. "There's no provision within the Maastricht Treaty for such an event," he said, referring to the agreement signed in 1992 on European monetary union.
German lawmaker Frank Schaeffler said Greece should be prepared to leave the euro area if it can't push through enough austerity measures to cut its budget shortfall. Quitting the euro would allow Greece to devalue its currency and improve the country's competitiveness in the short term, he said.
Deficits have surged across Europe after governments bailed out banks and increased spending to fight the worst recession in 60 years. Greece's shortfall last year was more than four times the EU limit, though it wasn't the region's biggest. Ireland's budget gap was revised up to 14.3 per cent, the largest for any country since the start of the euro in 1999, Eurostat said.
An IMF team is in Athens for preliminary talks with Greek officials and the European Union about 45 billion-euro (Dh220.32 billion) package of emergency loans at below-market rates.