REACTION:THE ANNOUNCEMENT that Greece would be seeking help from the International Monetary Fund came as little surprise in Washington, where the spring meetings of the IMF are taking place this weekend.

The fund, which has remained tight-lipped throughout this entire episode, contented itself yesterday by saying it had received Greece’s request for a so-called “standby arrangement” – the IMF’s standard rescue lending programme for countries in trouble – and would move rapidly to finalise a deal.

But experts and former IMF officials say the fund is taking a risk by co-financing the programme with the euro-zone group of ministers, who have found it difficult to move swiftly and present an external show of unity on the issue.

Domenico Lombardi, president of the Oxford Institute for Economic Policy and a former IMF board member, said: “The IMF board can approve a [lending] programme pretty quickly, and has a lot of experience in this area.”

The fund has recently revised its procedures to take decisions more quickly and disburse more of the money upfront if required to restore market confidence and get a country back on the right track.

But Mr Lombardi said the several weeks it had taken the euro-zone ministers to agree a package, with evident disagreements between them, had diminished the likelihood of success.

“In that time the yield on Greek debt has risen from around 6 per cent to above 8 per cent,” Mr Lombardi said. “In truth, this [package] has probably bought them six months at most before they have to think about restructuring debt.”

Both European ministers and IMF managing director Dominique Strauss-Kahn say they are not working on the possibility of a restructuring. European ministers defended the euro zone’s handling of the programme, saying it had to follow EU procedures to get a legitimate and credible agreement.

It remains unclear exactly how decisions will be made to release money under the programme. Typically, an IMF rescue is disbursed in tranches, with continued lending dependent on reviews of whether the country is sticking to the agreement’s conditions.

“You keep hearing in Europe that the ECB and the euro zone will set up the conditionality, and then in Washington you hear from the IMF managing director that the fund will set conditionality,” Mr Lombardi said. – (Copyright The Financial Times Limited 2010)