Eurogroup deal key to saving Greece: IMF

AFP, MANILA

Sat, Nov 17, 2012 - Page 15

A crucial meeting of Eurozone finance ministers next week will be key to getting Greece “back on its feet,” IMF Managing Director Christine Lagarde said yesterday, as she cut short her visit to Asia to attend the talks.

Lagarde told a news conference in Manila that the Eurogroup’s focus was getting the debt-wracked country on a “sustainable” path as soon as possible.

“You know, it’s not over until the fat lady sings, as the saying goes,” Lagarde told reporters when asked if she expected a deal to be forged at the meeting next week in Brussels.

“It’s a question of working hard, putting our mind to it, making sure that we focus on the same objective, which is that ... Greece can operate on a sustainable basis, can recover, can get back on its feet, can re-access markets as early as possible,” she said. “That is what is driving the IMF’s determination.”

Eurogroup President Jean-Claude Juncker has said he hopes the meeting on Tuesday would clear the way for a payment of 31 billion euros (US$39.5 billion) that Greece desperately needs to avoid default.

Juncker has clashed publicly with Lagarde over extending Greece’s agreed debt-to-GDP ratio target.

Juncker wants the target of 120 percent of Greece’s debt-to-GDP ratio by 2020 pushed back to 2022. It is now at 170 percent.

Despite two bailouts involving the EU, the European Central Bank and the IMF, as well as a private-sector debt cut, Greece is set to enter its sixth year of recession next year, pushing its debt mountain to 190 percent of output in 2014.

According to data released on Thursday, the eurozone slipped back into recession for the second time in just three years in the third quarter, raising fears it would make the resolution of the debt crisis even more difficult.

“The recession is not exactly a surprise. We had actually forecast there would be a recession in the eurozone in 2012 and growth will pick up in 2013,” Lagarde said yesterday.

“I certainly hope that will be the case in 2013 if policymakers will actually act and do what is necessary and appropriate to recover from the crisis,” she said.