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May 28, 2015 7:28 pm
Greek exit from euro is ‘a potential’, says Lagarde
Stefan Wagstyl and Claire Jones in Dresden and Shawn Donnan in Washington
Christine Lagarde, managing director of the International Monetary Fund (IMF), speaks at a news conference during the IMF and World Bank Group Annual Meetings in Washington, D.C., U.S., on Thursday, Oct. 9, 2014. The global response to the Ebola crisis is "way behind the curve," World Bank President Jim Yong Kim said today, as leaders of the three affected African nations appealed for financing and faster assistance. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Christine Lagarde©Bloomberg
Christine Lagarde
The head of the International Monetary Fund has acknowledged that Greece could leave the euro, while insisting that this would not mark the end of the single currency.
“It’s a potential,” Christine Lagarde told the German newspaper Frankfurter Allgemeine Zeitung, adding that it would be “no stroll” but also that it would definitely not mean the end of the euro. Ms Lagarde’s admission came as the IMF offered Greece three more weeks to repay €1.6bn it owes to the fund next month, insisting that Athens still had a long way to go to persuade creditors to unlock desperately needed bailout money.
Frustration is mounting over the slow progress in the talks between Greece and its three bailout monitors — the IMF, the European Central Bank and the European Commission — and exasperation at repeated Greek claims that an agreement is imminent.
“It’s very unlikely that we will reach a comprehensive solution [between Greece and its creditors] in the next few days,” Ms Lagarde said in her interview with the newspaper.
An official attending the Dresden meeting of finance ministers from the Group of Seven leading industrialised countries said on Thursday: “We are still on most key issues quite far apart. [The idea] that a deal is just around the corner and can come by Sunday is far, far from reality.”
The IMF confirmed on Thursday that Athens would be permitted to delay all its June repayments until the end of the month, removing the threat that Greece could default as soon as June 5, when €300m falls due.
At the same time, fund officials warned the G7 gathering that Athens was still far from a deal to secure much-needed rescue aid, as it had failed to deliver credible reform proposals.
Claims by Greek officials that Athens had begun drafting a staff-level agreement with its bailout monitors and could reach a deal by the weekend briefly buoyed financial markets earlier this week. The Greek government repeated the assertion on Thursday.
“We are coming to these negotiations with the aim to have a deal with the partners by Sunday,” said Gabriel Sakellaridis, the Greek government spokesman.
But a senior G7 official said the two sides still remained far apart on issues that have separated them for months, including pension overhauls, labour market liberalisation and a coherent fiscal package.
“We haven’t got much further in the negotiations,” said Wolfgang Schäuble, German finance minister.
William Murray, an IMF spokesman, said Greek officials had not asked for a “bundling” of its June payments, as permitted by a little-known rule introduced in the 1970s, but “they are entitled to do that if they want”.
Just what the market reaction to any such move by Greece would be is unclear. It has been invoked only once — by Zambia in the 1980s.
Senior EU officials, including Angela Merkel, the German chancellor, have told Alexis Tsipras, the Greek premier, that he will not be able to reach a deal without IMF approval.
The IMF is maintaining a tough line in the talks partly because it wants economic reform in Greece and partly because it knows that especially generous treatment for Athens would provoke criticism elsewhere in the world. The senior G7 official said: “[The IMF] can’t blatantly disregard its own rules.”
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
Read more
But the fund is also turning the screws on eurozone bailout lenders, saying they will need to offer some relief on existing rescue loans and provide new aid if any economic package is to be “sustainable”.
The G7 official said: “There has been no concrete discussion on the financing of the debt. There has been no other discussion other than acknowledging that this has to add up.”
Asked about possible future debt relief, Pierre Moscovici, European commissioner for economic affairs, indicated that he did not rule it out, once comprehensive reforms were in place, saying: “We’ll see later on what kind of further arrangements can be found.” He added: “We need to work day and night to find an agreement. No matter what the date we have little time. But an agreement is certainly possible.”
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/d794efd4-055b-11e5-bb7d-00144feabdc0.html#ixzz3bXfiRxb3
May 28, 2015 7:28 pm
Greek exit from euro is ‘a potential’, says Lagarde
Stefan Wagstyl and Claire Jones in Dresden and Shawn Donnan in Washington
Christine Lagarde, managing director of the International Monetary Fund (IMF), speaks at a news conference during the IMF and World Bank Group Annual Meetings in Washington, D.C., U.S., on Thursday, Oct. 9, 2014. The global response to the Ebola crisis is "way behind the curve," World Bank President Jim Yong Kim said today, as leaders of the three affected African nations appealed for financing and faster assistance. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Christine Lagarde©Bloomberg
Christine Lagarde
The head of the International Monetary Fund has acknowledged that Greece could leave the euro, while insisting that this would not mark the end of the single currency.
“It’s a potential,” Christine Lagarde told the German newspaper Frankfurter Allgemeine Zeitung, adding that it would be “no stroll” but also that it would definitely not mean the end of the euro. Ms Lagarde’s admission came as the IMF offered Greece three more weeks to repay €1.6bn it owes to the fund next month, insisting that Athens still had a long way to go to persuade creditors to unlock desperately needed bailout money.
Frustration is mounting over the slow progress in the talks between Greece and its three bailout monitors — the IMF, the European Central Bank and the European Commission — and exasperation at repeated Greek claims that an agreement is imminent.
“It’s very unlikely that we will reach a comprehensive solution [between Greece and its creditors] in the next few days,” Ms Lagarde said in her interview with the newspaper.
An official attending the Dresden meeting of finance ministers from the Group of Seven leading industrialised countries said on Thursday: “We are still on most key issues quite far apart. [The idea] that a deal is just around the corner and can come by Sunday is far, far from reality.”
The IMF confirmed on Thursday that Athens would be permitted to delay all its June repayments until the end of the month, removing the threat that Greece could default as soon as June 5, when €300m falls due.
At the same time, fund officials warned the G7 gathering that Athens was still far from a deal to secure much-needed rescue aid, as it had failed to deliver credible reform proposals.
Claims by Greek officials that Athens had begun drafting a staff-level agreement with its bailout monitors and could reach a deal by the weekend briefly buoyed financial markets earlier this week. The Greek government repeated the assertion on Thursday.
“We are coming to these negotiations with the aim to have a deal with the partners by Sunday,” said Gabriel Sakellaridis, the Greek government spokesman.
But a senior G7 official said the two sides still remained far apart on issues that have separated them for months, including pension overhauls, labour market liberalisation and a coherent fiscal package.
“We haven’t got much further in the negotiations,” said Wolfgang Schäuble, German finance minister.
William Murray, an IMF spokesman, said Greek officials had not asked for a “bundling” of its June payments, as permitted by a little-known rule introduced in the 1970s, but “they are entitled to do that if they want”.
Just what the market reaction to any such move by Greece would be is unclear. It has been invoked only once — by Zambia in the 1980s.
Senior EU officials, including Angela Merkel, the German chancellor, have told Alexis Tsipras, the Greek premier, that he will not be able to reach a deal without IMF approval.
The IMF is maintaining a tough line in the talks partly because it wants economic reform in Greece and partly because it knows that especially generous treatment for Athens would provoke criticism elsewhere in the world. The senior G7 official said: “[The IMF] can’t blatantly disregard its own rules.”
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
Read more
But the fund is also turning the screws on eurozone bailout lenders, saying they will need to offer some relief on existing rescue loans and provide new aid if any economic package is to be “sustainable”.
The G7 official said: “There has been no concrete discussion on the financing of the debt. There has been no other discussion other than acknowledging that this has to add up.”
Asked about possible future debt relief, Pierre Moscovici, European commissioner for economic affairs, indicated that he did not rule it out, once comprehensive reforms were in place, saying: “We’ll see later on what kind of further arrangements can be found.” He added: “We need to work day and night to find an agreement. No matter what the date we have little time. But an agreement is certainly possible.”
