Lagarde tells Europeans to start Greek debt debate
The International Monetary Fund puts more pressure on eurozone finance ministers telling them that they must immediately begin negotiations over Greek debt relief despite German opposition, as journalist Peter Spiegel reports.
The head of IMF, Christine Lagarde, sent a letter to all 19 ministers on Thursday night, which was obtained by the Financial Times, asking them to put the Greek dent relief on the table immediately, or risk losing IMF participation in the programme.
“We believe that specific [economic reform] measures, debt restructuring, and financing must now be discussed contemporaneously,” Ms Lagarde wrote. “For us to support Greece with a new IMF arrangement, it is essential that the financing and debt relief from Greece’s European partners are based on fiscal targets that are realistic because they are supported by credible measures to reach them.”
According to Ms Lagarde, such reforms would only produce a primary surplus of 1.5 per cent in 2018 and not the 3.5 per cent the EU has mandated.
“Let there be no doubt that meeting this higher target would not only be very difficult to reach, but possibly counterproductive,” she wrote adding “We do not believe that it will be possible to reach a 3.5 per cent of GDP primary surplus by relying on hiking already high taxes levied on a narrow base, cutting excessively discretionary spending, and counting one-off measures as has been proposed in recent weeks.”
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