IMF Lagarde: Greek Euro Exit Hard, Not Only For Greece

Greece’s  political leaders need to stick to the commitments and abide the austerity programme, IMF head Christine Lagarde said and she warned that a Greek euro exit would be expensive and hard not only for Greece. She also stressed that the IMF would talk to any democratic-elected Greek government, implying the IMF would talk to left-wing Alexis Tsipras.

“I think what we should look at is the optimal scenario where the country has the political resolve to actually observe the commitment, comply with the undertaking, stay within the zone, which seems to be the desire of the population,” Lagarde said in an interview on Dutch television.

“But it goes with the effort to abide by the program which has been put in place and where the euro partners actually agreed to support the country.”

Euro zone exit “would be extremely expensive and hard, and not just for Greece,” Lagarde said.

Pressed in the TV interview on whether the IMF sees a scenario where Greece leaves, Lagarde said: “It’s not my hope. You always have, in whatever job you do, you have to prepare for the worst and hope for the best. We’re certainly hoping for the best.”

The IMF is making technical preparations for a Greek exit because that is its responsibility. “But I’m not suggesting, you know, that this is a desirable solution. I’m just saying this is within the range of multiple options, one that we have to technically look at, obviously,” she said.

Lagarde added, however, that she sees a determination amongst European leaders to keep the euro zone on track.

“If I knew (that the euro zone will fail), I probably would not tell you. But it so happens that the political drive that I see, that I hear from the key leaders is to actually keep it together,” she said in the interview on Dutch public television Nieuwsuur. (further reading REUTERS)

At a press conference in London, Christine Lagarde said the IMF would hold talks with any democratically-elected government.

  Looking for the Next Greek Government

 But she added that the organisation was also “rules based” and would not discriminate in favour of any member.

“The clear preference of the IMF in the interests of stability is that the appropriate implementation of the programme be endorsed by whichever of the political forces that will result from the election on June 17 and that those political forces will engage in constructive dialogue with both the euro area partners as well as the IMF in order to proceed to that implementation.” (UKPress)

Lagarde counted three key words for the solution of the Greek problems: competitiveness, structural reforms and tax collection.

Lagarde shows size of Greek wages

PS I would agree with her on the last two proposals. But competitiveness? Lowering wages to hunger levels of 400-600 euro per month gross, does not help if the esteemed IMF does not consider ‘growth and development measures’ … because what’s the purpose of low wages if there are no job around?