Managing Director of International Monetary Fund, Christine Lagarde, said that “Greece doesn’t need debt haircut for the time being,” right after the meeting with German Chancellor Angela Merkel in Berlin on Wednesday. What needed is “debt restructuring and interest rate cuts on bailout loans.”
Stressing the need of reforms, Lagarde told German state broadcaster ARD TV that “we need to look into interest rates cuts and maturities.”
“The volume of restructuring will depend how much reform, how progress, how strong the Greek economy is at the end of the program,” she added.
“We are much more confident after the progress made by the Greek authorities to come in the direction of the institutions to satisfy the requirements that we have in order to engage in a programme.” Lagarde said.
She reiterated that Greece should implement pension and income tax reforms demanded by the IMF as a condition for taking part in a bailout programme.
“Obviously, the second leg is going to be the level of debt that the country can carry out and that debt will have to be restructured appropriately and the volume of restructuring will clearly depend how much reform, how progress, how strong the Greek economy is at the end of the programme,” Lagarde said.
“What will be needed is not a haircut if the reforms are done but a significant extension of maturity, a significant interest rate capping and that will have to be discussed in greater details later on as progress is made on the reform front,” Lagarde added.
This will have to take place at the end of current bailout programme for Greece.
Of course she would say that because the IMF is one of the creditors! What she can’t do is provide more loans (the debt underliners at the IMF would not agree to that) but she will not settle for debt relief. The proposed measures as pension cuts and taxes, etc. of which Dijsselbloem said they are not austerity (what is it then?) comes straight out of a IMF Stuctural Adjustment Programme handbook. What is missing is devaluing the currency and adjusting interest rates (near zero now anyway) which Greece cannot do because that is determined now by the ECB.
Greece will be debt slave until 2059. Funny (sad actually) considering that Greece was one of the countries that forgave Germany half of its WWII debt in 1953.