WASHINGTON—The International Monetary Fund's role in the continuing drama over Greece is limited—thus far—to advising Athens how to reform its tax and budget systems so the government can persuade markets and other euro-zone nations that its deficit-reduction program is valid, informed people on both sides of the Atlantic say.

The IMF has said it is providing "technical assistance" but hasn't disclosed what that work amounts to, leading to speculation that the fund is quietly putting together a rescue package for Greece, or is providing the analysis behind the European Union's arm-twisting of Athens to slash its deficit.

Dominique Strauss-Kahn, the IMF's managing director, says "the Europeans want to try to deal with the problem themselves," but "if we are asked to do more, we will do more." He has talked several times with Greece's prime minister. Reuters

The IMF isn't playing a covert role of that sort, those familiar with its work say. Rather, European officials are insisting that they run negotiations with Greece. And while the IMF would like to play a larger role, European politics are getting in the way.

On Friday, IMF Managing Director Dominique Strauss-Kahn said again that "the Europeans want to try to deal with the problem themselves...[but] if we are asked to do more, we will do more." During the crisis, Mr. Strauss-Kahn has talked several times with Greek Prime Minister George Papandreou, an old ally in European socialist politics.

The EU's decision to keep the IMF on a short leash reflects pressure from European Central Bank President Jean-Claude Trichet, French President Nicolas Sarkozy and Luxembourg's Prime Minister Jean-Claude Juncker, who also chairs euro-zone finance ministers' meetings, say European officials.

Their argument is that turning to the IMF would undermine the credibility of the euro and the 16-nation euro zone. The IMF board includes the U.S. and China, and most euro-zone leaders don't want outside powers to have a say in matters that affect Europe's common currency.

Mr. Juncker considers the euro zone a "single monetary zone that should be able to cope with problems itself," a person close to him says. The ECB declined to comment.

German Chancellor Angela Merkel is more open to a deeper IMF role, says a person familiar with her thinking. At the same time, she would insist on tough terms for any European aid for Greece, the person says. Ms. Merkel believes the IMF has more know-how and experience at setting up aid packages than the European Commission, the executive arm of the EU. But she has acquiesced to other European leaders after finding herself in a minority, the person says. German officials say her own finance ministry is against a bigger IMF role.

Further complicating the IMF-EU relationship is the French presidential election in 2012. Mr. Strauss-Kahn has said he is considering a run, and he is now polling higher than Mr. Sarkozy. A big role for the IMF in helping resolve the Greek crisis could help Mr. Strauss-Kahn. The IMF is being especially circumspect in lobbying for a larger role for fear of being accused of political meddling, say IMF insiders.

Thus far, the commission and the IMF have divided responsibilities. The EU is driving negotiations over Greece's short-term deficit target and analyzing Greece's plans. The commission has beefed up its analytic capabilities. Former IMF economist Istvan Szekely is now chief economist of the commission department that handles fiscal issues.

The Greek finance ministry, though, is turning to the IMF for longer-term help, so it can meet budget targets in 2011 and 2012. The IMF is advising Athens on how to design better tax-collection systems to reduce rampant tax evasion. This year, the Athens government assessed a €700 million ($953 million) surcharge on large businesses to make up for a revenue shortfall, the latest stopgap measure to deal with such budget shortfalls.

The IMF is also helping Greece revamp its tax structure. Jeff Anderson, a European specialist at the Institute of International Finance, a banking trade group, says Greece likely will have to raise its value-added tax, which currently has a top rate of 19% and is riddled with exceptions, to about 25%, a common rate in Western Europe. Hungary, which has been trying to shrink its budget deficit as part of an IMF program, raised its VAT rate to 25% from 20% in July 2009.

Additionally, the IMF is advising Greece how to redesign its spending controls. The government regularly underestimates expenditures for health care and the military. Fixing the problem requires beefed-up budget controls and computer systems to track payments and try to reduce graft. Greece's inability to manage its finances has been sharply criticized by the EU's statistical authority, Eurostat.

Questions surrounding Greece's fiscal affairs have undermined faith in the country's ability to deliver on its promises. That has ratcheted up pressure on the government from other EU members negotiating with Greece and from markets wary about whether Greece can pay its debts without a big aid package.

Ted Truman, a former international Treasury official in the Obama administration, says the EU should use the IMF more fully—if only to give the electorate in Greece and elsewhere a political target other than Brussels, Paris and Berlin. The Europeans are treating Greece like a "stepchild who has misbehaved and are making an example of him for other children," he said. "The pan-European message that conveys is politically disastrous," because it could turn popular sentiment in the EU's economically weaker countries against tighter integration.

Write to Bob Davis at bob.davis@wsj.com and Marcus Walker at marcus.walker@wsj.com