Lagarde: Debt relief technical details must be now decided

Lagarde: Debt relief technical details must be now decided


The agreement for Greece’s debt sustainability must be in compliance with International Monetary Fund (IMF) rules, IMF Managing Director Christine Lagarde said at an event held by Bruegel Institute in Brussels on Wednesday, discussing the course of the global economy.

Lagarde said that the extent of debt relief for Greece will be decided in 2018, after the end of the programme, but the technical details must be agreed now. In order for the IMF board to propose the Fund’s participation in the Greek programme, she explained, the technical details had to be made specific and there had to be a “sufficient level of commitment” by Greece’s creditors for debt relief.

She noted that the May decision on Greek debt included a series of methods for restructuring Greece’s debt but these were presented in a “very general way and without details”. This was contrary to the rules for the debt sustainability analysis that must accompany each programme, the IMF chief said. “We cannot leave things at the generality of a list of options; we must enter into the technical details,” she added.

Developments concerning the Greek issue in recent weeks have been in the “right direction,” Lagarde noted and resulted in a package of policies for supporting the Greek economy. This package, she added, will be enacted now and then implemented at a time when “growth conditions” have improved.

Referring to pension reforms, in particular, the IMF chief said it was wrong to accuse the IMF of demanding more “austerity” since it was only asking for the implementation of measures agreed in 2016 without suspending already implemented reforms. She noted that the package would also include income tax reforms that will widen the taxation base.

The next steps, once implementation of these commitments was completed, would be to discuss the sustainability of Greece’s debt and the restructuring that will be needed, Lagarde said.

Referring to privatisations, the IMF chief said the Privatisation Fund that has been set up will soon be fully operational in order to achieve targets for privatisation revenue. She noted that there was a lot of potential in the area of privatisations that had been pointed out for the last seven years, expressing hope that with a little “determination” the new fund will be able to attract investors.

Replying to question on collective bargaining, she said the IMF’s position was that the level of cooperation, incorporation and effectiveness of collective agreements should be able to support a reduction in inequality and not create obstacles to flexibility, adaptability and the link between labour cost and productivity, in order to ensure progress./IBNA