US Treasury Secretary Geithner presses for Greek rescue plan

(WASHINGTON) - US Treasury Secretary Timothy Geithner pressed European Union leaders and the IMF Saturday to hammer out a rescue plan for Greece as its financial crisis loomed over an IMF finance ministers meeting in Washington.

Geithner met Greek counterpart George Papaconstantinou and representatives of the EU and International Monetary Fund and "encouraged them to move quickly to put in place a package of strong reforms and substantial concrete financial support," his office said in a statement.

EU economic and monetary affairs chief Olli Rehn said Friday that EU members had worked intensively on details of a Greek rescue package and "should be able to complete the work by early May."

Athens' soaring public deficit and debt has fueled chronic instability on financial markets and raised pressure on other eurozone countries with weak finances like Portugal and Spain.

A top Chinese banker sought meanwhile to soothe fears generated by the Greek crisis, but did not say if Beijing would join a rescue effort.

Yi Gang, deputy governor of the People's Bank of China, voiced confidence that EU and eurozone countries would deal with issue, which has called the eurozone's credibility into question, Dow Jones Newswires reported.

Speaking to reporters on the sidelines of the IMF meeting, Yi did not elaborate on how China might play a part in helping Greece, however.

Athens officially called on Friday for a 45-billion-euro (60-billion-dollar) lifeline to help it scale a mountain of debt.

IMF managing director Dominique Strauss-Kahn has promised the Fund will "move expeditiously" in response to Greece's appeal for help -- the first ever from a eurozone nation.

"We have been working closely with the Greek authorities for some weeks on technical assistance, and have had a mission on the ground in Athens for a few days working with the authorities and the European Union," he said.

The stability of the euro -- which closed Friday up one US cent at 1.3384 dollars in New York -- is at stake as Greece wrestles with debt of around 300 billion euros.

French Finance Minister Christine Lagarde said Friday that "the Greek government's decision indicates that the process is launched," and expressed relief that Athens's cost of borrowing had already dipped.

The EU has said it sees no "obstacles" to Athens' request to activate a three-year joint EU-IMF rescue in the first year at concessionary interest rates of about 5.0 percent.

Under a deal hammered out with EU leaders on April 11, the IMF would cover a third of the cost of the bailout.

Meanwhile, divisions within the Group of 20 rich and developing nations over a worldwide tax on banks to claw back the cost of bailing out financial institutions also loomed over the IMF's day-long conclave.

In a statement released Friday, the G20 said it wants the financial sector to "make a fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system."

The IMF had initially drawn up a proposal for two taxes -- one to reimburse governments for the cost of bailing out banks hit by the crisis, and another to dissuade banks from taking excessive risks in the future.

"It's a basic sense of fairness that we adopt that basic framework," Geithner said on Friday.

But some G20 member countries such as Brazil and Canada -- who both have seats on the IMF's policy-setting international monetary and financial committee -- have expressed opposition.

Another core issue is an increase in contributions to IMF coffers from developing economies, and a subsequent rise in their influence in the Fund, which coordinates lending to distressed countries around the world.

A statement issued by Geithner on Saturday said: "The goal is to achieve legitimate representation based on countries' economic weight in the world."