Sun, May 27, 2012 - Page 11 News List

Lagarde ratchets up pressure on Greece

The Guardian, LONDON

IMF Managing Director Christine Lagarde addresses graduates during commencement celebrations at Harvard Kennedy School in Cambridge, Massachusetts, on Wednesday.

Photo: AFP

The IMF ratcheted up the pressure on crisis-hit Greece when IMF Managing Director Christine Lagarde yesterday said she had more sympathy for children deprived of decent schooling in sub-Saharan Africa than for many of those facing poverty in Athens.

In an uncompromising interview, Lagarde said it was payback time for Greece and made it clear that the IMF had no intention of softening the terms of the country’s austerity package.

Using some of the bluntest language of the two-and-a-half-year debt crisis, she said Greek parents had to take responsibility if their children were being affected by spending cuts.

“Parents have to pay their tax,” she said.

Greece, which has seen its economy shrink by a fifth since the recession began, has been told to cut wages, pensions and public spending in return for financial help from the IMF, the EU and the European Central Bank.

Asked whether she was able to block out of her mind the mothers unable to get access to midwives or patients unable to obtain life-saving drugs, Lagarde replied: “I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time, because I think they need even more help than the people in Athens.”

Predicting that the debt crisis has yet to run its course, Lagarde said: “Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

She said she thinks “equally” about Greeks deprived of public services and Greek citizens not paying their tax.

“I think they should also help themselves collectively,” she said.

Asked how, she said: “By all paying their tax.”

Asked if she was essentially saying to the Greeks and others in Europe that they had had a nice time and it was now payback time, she said: “That’s right.”

The intervention by Lagarde comes after the caretaker Greek government met to discuss a sharp fall in tax revenues — down by a third in a year. Under the terms of the country’s bailout, Athens has agreed to improve Greece’s poor record for tax collection to reduce its budget deficit, and Lagarde’s remarks are evidence of a growing impatience in the international community. Reports surfaced in Germany and France of preparations being made to cope with Greece’s possible departure from the single currency after its election on June 17.

Belgium Deputy Prime Minister Didier Reynders said it would be a “serious professional error” if central banks and companies did not prepare for an exit.

The euro came under fresh attack on the foreign exchanges markets, dropping below 1.25 euros to the US dollar at one point on Friday, as the Spanish government was in talks to pump up to 19 billion euros (US$23.78 billion) of rescue finance into Bankia, one of the country’s biggest banks, and the Catalan regional government sought financial help from Madrid to deal with its debts.

Signs emerged of a widening gulf between Germany and France over whether common eurobonds should be issued to help those countries, such as Greece and Spain, with high interest rates on their debt.

Bundesbank president Jens Weidmann poured cold water on the idea — which is strongly backed by French President Francois Hollande — and also said financial aid to Greece should be cut off if it failed to keep to the bailout deal.

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