Responding to a question on the IMF’s participation on the Greek programme, Madame Lagarde at the Spring Meeting of the Fund has once again reaffirmed the Fund’s principled position, that concrete decisions should be taken by the European lenders to make Greek debt sustainable before the IMF agrees to participate in the current Greek programme.
As Berlin has not yet agreed to any such undertakings, it would appear that the gap on debt restructuring between the German government and the IMF has not yet been bridged, despite the announcement of the return of technical teams to Athens.
Christine Lagarde 20 April 2017: As you all know, and you certainly do, I have consistently repeated that for the IMF to be entering into a program with Greece would require that the program can walk on two legs. One leg is the leg of reforms and the other leg is that of debt sustainability.
The leg of reform has made progress. We have always contended that reforms should be sustainable reforms, parametric reforms that would actually lead the Greek economy to be more solid going forward. We are seeing progress that needs to be detailed and ironed out when the mission returns to Greece in a few days on both the tax reform and on pension reform. There are other areas that need to be negotiated as well, but this is making progress and we are heading in a good direction when it comes to reforms.
On the Debt Sustainability Analysis, which, as you know, is part of any program that I would submit to the Board, we still need to discuss and understand the primary surplus objective that would be assigned to the Greek economy, which, in our view, and in order to determine sustainability, would have to be reasonable. That will indeed determine the amount of debt restructuring that would be needed for the debt of Greece to be sustainable in the medium and long term.
