Still undecided
April 12, 2017
"Debt restructuring will be needed," if the International Monetary Fund (IMF) is to lend to Greece, the fund's managing director Christine Lagarde said on Wednesday.
Lagarde's comments come a few days after Greece and its European creditors agreed on the key elements of reforms that Athens needs to implement in exchange for a new loan under the 86-billion-euro bailout program, the third since 2010.
Lagarde said the IMF was still elaborating under what terms to lend to Greece.
"We are not there yet, but what I have seen in the last couple of weeks is heading in the right direction. We are only half-way through the discussion that needs to be had," Lagarde told a conference in Brussels.
She reiterated Greece's debt - now 178 percent of gross domestic product - will need to be restructured to guarantee the stability of the country's finances.
The scope of any restructuring "will be decided at the end of the program," but "the modalities have to be decided upfront," Lagarde said.
Strict conditions
Earlier this year the IMF had threatened to pull out of the rescue program, unless Greece's European partners consider further debt relief.
Germany, Europe's largest economy, opposes debt relief, believing that agreed reforms are enough to sustain financial stability. But Berlin still wants the IMF to join the bailout, now provided by eurozone governments alone, to make it more effective and less expensive for eurozone countries.
Lagarde said Wednesday any IMF loan to Greece would have to abide by strict conditions and no special treatment can be expected for Athens.
The IMF wants pension costs to be cut and the threshold for tax exemptions to be lowered. Athens has accepted the reforms, worth two percent of its gross domestic product, but it wants to link their application to a reduction of its public debt burden.
Lagarde said the additional belt-tightening measures could be implemented "as soon as the conditions of growth are consolidated."
Talks between Greece and its lenders are continuing and no date is fixed yet for negotiators to return to Athens. The Greek government believes talks may resume in Athens after the IMF spring meetings on April 21-23.
sri/dk (dpa, Reuters)