Fri, Jul 03, 2015 page15

• Greek debt relief is contingent on reform: Lagarde

  CARROT: IMF managing director Christine Lagarde said that Greece had been making progress toward generating a surplus prior to the SYRIZA administration

  • Reuters, WASHINGTON
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  One day after Greece became the first developed economy to default on a loan with the IMF, the head of the international lender on Wednesday suggested Greece should move to reform its economy before its European creditors give it a break on its debt.

  In an interview, IMF managing director Christine Lagarde avoided any pointed criticism of Greek Prime Minister Alexis Tsipras, but still hinted at frustrations as she said that Greece’s economy had been on the road to recovery before his SYRIZA party came to power.

  Lagarde was asked which should come first, commitments to reform by Athens or relief on its debts from eurozone governments.

  

  IMF managing director Christine Lagarde returns to her office after an interview at IMF headquarters in Washington on Wednesday.

  Photo: Reuters

  “Given where we are, my suspicion is it would be much preferable to see a deliberate move towards reforms [and] for that to be followed through by the other side of the balance,” Lagarde said.

  The Greek government had pushed for debt relief in months of negotiations with its European and IMF lenders on a cash-for-reform deal before Athens abruptly called a referendum.

  A defiant Tsipras urged Greeks on Wednesday to reject an international bailout deal — which calls for even greater austerity measures — wrecking any prospect of repairing broken relations with EU partners before the referendum on Sunday that might decide Greece’s future in Europe.

  “We do not have a choice as to who represents a country,” Lagarde said when asked about the trustworthiness of the Greeks. “And we take all governments, duly elected ... as the legitimate partner in the negotiations.”

  Less than 24 hours before his combative address, Tsipras had written a conciliatory letter to creditors asking for a new bailout that would accept many of their terms.

  Lagarde declined to comment on the latest offer from Athens or comment directly on whether she viewed Tsipras as a reliable negotiating partner, though she hinted at growing frustration with the Greek leader’s public negotiating stance.

  “We have received so many ‘latest’ offers, which themselves have been validated, invalidated, changed, amended, over the course of the last few days, that it’s quite uncertain exactly where the latest proposal stands,” she said.

  “I think there is a democratic process that is underway, and that should result in hopefully more clarity, less uncertainty as to what is the determination of the Greek people, and what is the authority of the government,” she said about Sunday’s referendum.

  Long lines at cash machines this week provided a stark visual symbol of the pressure on Tsipras, who came to power in January vowing to end austerity and protect the poor.

  Lagarde said Greece had made progress on many difficult reforms and had started to return to growth before SYRIZA came to power.

  “What I find really concerning is the fact that after those years, as growth was beginning to pick up, as the country was beginning to generate a surplus, then suddenly there is this massive backtracking, which puts us backwards,” she said.

  The IMF has been criticized for breaking its own rules in lending to Greece and endorsing austerity measures proposed by the European Commission and the European Central Bank, the IMF’s partners in the “troika” of Greece’s lenders.
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