The International Monetary Fund (IMF) is committed to continuing its support of Greece after the end of the fiscal program in August, but there is work that the country still needs to do, especially in structural reforms, IMF Managing Director Christine Lagarde said on Thursday.
At a press conference during the fund’s and World Bank’s Spring Meetings in Washington, DC, Lagarde said the fiscal program “is expected to come to an end in August and the IMF is committed to continue to support Greece and to help it get back on this economy sovereignty, and we would do the most we can in accordance to our policy principles.” She added, however, that “structural reforms must actually be implemented, and there is work on the way, and the Greek people are doing through some of it. We know that it is not yet completed.”
The eight years of fiscal policy, although very difficult for the Greek people, “significantly improved the (country?s) economic position,” Lagarde said. The fact that the 10-year Greek bond was below 4% on Wednesday “is clearly an indication that markets eventually will finance Greece because that is the ultimate progress, public financing to be replaced by private financing.” Markets, she said, “are looking at the Greek situation much more favorably than they were before.”
Lagarde also criticised the policy of public spending cuts, which she said the IMF had never advocated. “We know that some of those (economic) successes – and they were good results, often better than expected – are attributable to very drastic measures that were decided by the Greek government, not necessarily on the advice of the IMF, because we have not advocated for additional public spending cuts. So much has been cut,” she noted.
Critical talks on Greek debt relief on the sidelines of IMF-WB summit
Brussels and Athens are now turning their attention to Washington, where critical discussions on Greek debt relief will be held on the sidelines of the spring International Monetary Fund and World Bank Spring Meeting.
According to Athens-Macedonian News Agency’s sources, the Europeans welcomed the IMF’s estimates for the medium-term course of the Greek economy, which showed greater convergence with those of Europe. At the same time, European officials are now convinced of the IMF’s “will” to activate its programme for Greece before the European part of the programme is completed.
In addition, in the last few months, the Eurogroup Working Group has been working on the technical work to specify the debt relief measures to be implemented after the end of the programme, but also on the so-called ‘French mechanism’ for linking growth with the repayment of Greek sovereign debt.
In any case, the IMF’s intentions will be obvious over the next few days and during the meetings that will be held among the participants in Washington.