BERLIN (MNI) - The head of Germany's Ifo economic research institute on Thursday said the best way to solve the Greek financial crisis is for the country to leave the eurozone.

"I would recommend that Greece leaves the European Monetary Union," Sinn said at a press conference in Berlin. The country should then devalue its currency and a debt moratorium should be put in place, he proposed.

"This would be cheaper [for the other Eurozone countries] then to permanently finance Greece," Sinn said, arguing that Greece's biggest problem was its elevated foreign trade deficit and not mainly its high public debt.

In order to solve the country's public debt problem, Greece should turn to the International Monetary Fund rather than to the European Union, Sinn advised. "The IMF has enough money to help out in the current crisis and it will hand out loans only under strict conditions," he said.

Still, this would not solve the problem of Greece's elevated foreign trade deficit, the Ifo head stressed. "The IMF has only the means to solve a temporary problem, not a permanent one," he reckoned.

Sinn warned against plans for creating an European Monetary Fund. He doubted that such a Fund could have the same power to tie conditions to its loans as the IMF has.

--Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com