Lagarde gives Schaeuble time to delay Greek debt relief decisions until 2018

Managing director of the International Monetary Fund, Christine Lagarde, paved the way for a potential compromise at the next Eurogroup meeting on the Greek debt crisis. In an exclusive interview with German economic newspaper Handelsblatt, she said the IMF is  willing to participate in a Greek bailout and give European creditors more time to settle an ongoing dispute over debt relief.

“If the creditors are not yet at that stage where they can agree on and respect our assumptions, if it takes them more time to get there, we can acknowledge that and give them a bit more time,” she said.

“There can therefore be a program in which the disbursement only takes place when the debt measures have been clearly outlined by the creditors,” she said.

The compromise could allow euro zone finance ministers to give the go-ahead for their next payment of their tranche of aid at their meeting on June 15, Handelsblatt said.

“It is a possibility for an agreement,” Lagarde said but stressed that she still considered a rapid agreement on debt relief as the “ideal solution”.

“We calculate the Greek debt sustainability based on the real situation of the Greek economy,” she added.

In real world words, this means than the IMF will ‘participate’ and keep its role as adviser without financing the Greek program and until a debt relief solution is worked out with the European creditors. At the same time it will participate with its own Memorandum of Understanding and will keep up the pressure on Greece to implement the additional austerity measures.

But it will keep pushing the European creditors also for a debt relief recognizing that Greece cannot pay back in full the money it owns.

German finance minister Wolfgang Schaeuble insists that the IMF’s projections are “too pessimistic” and nevertheless he refuses to talk about debt relief before the program ends in August 2018.

Even if he will no longer be Finance Minister after the German elections, Schaebule will take care that his successor will not bend to IMF’s debt relief pressure.

PS and the truth is out: IMF and Schaeuble keep and will keep playing their petty games until the second half of 2018. The Greek government will do nothing to change the game rules.