IMF: Greece risks manageable if EU acts in time

The eurozone can manage the risks linked to Greece's debt crisis if it acts in time, the International Monetary Fund said Thursday in a statement on the currency bloc.

"Provided there is a timely and effective policy response, the near-term risks from uncertainty surrounding Greece appear manageable," IMF staff said after annual consultations with eurozone authorities.

For several weeks debt-riddled Greece has failed to reach an agreement with the IMF and the European Union on the reforms needed to unblock the last installment of its bailout program, which expires on June 30, raising concerns about a default that could result in severe negative consequences for the eurozone.

According to the IMF staff, the risks of contagion from the Greek crisis have been "much reduced" by policy measures taken by the authorities, including the European Central Bank's launch in March of a massive bond-purchase program, or quantitative easing, and European firewalls erected by Brussels.

"Beyond the near term, the risks surrounding Greece can be managed as long as there are concerted efforts to accelerate and deepen integration within the monetary union to make it more resilient," the IMF said.

The global crisis lender reiterated concerns about the eurozone's tepid economy, highlighting a "chronic lack of demand" and "slow progress" in structural reforms that would create more jobs and investment.

The IMF also repeated its call for European banks to clean up their balance sheets, reducing high levels of bad loans, to unleash new lending.  

"A stronger collective push is urgently needed to consolidate the recovery, raise trend growth and deepen integration," it said.