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.