Greece going through difficult phase, says Lagarde

The head of the International Monetary Fund on Monday said Greece’s adjustment program was in a «difficult phase» with economic reforms moving slowly and growth extremely weak, a warning that came as the global lender approved a new aid tranche for the debt-burdened country.

IMF Managing Director Christine Lagarde urged the new unity government to implement agreed policies and said fiscal adjustment was the most pressing challenge for Prime Minister Lucas Papademos’ new coalition government.

“The new government should use its wider mandate to steadfastly implement the program, which is the best way to help Greece manage the risks it now faces,» she added.

The IMF earlier agreed to release a 2.2 billion euro (1.88 billion pounds) aid tranche to Greece, part of a three-year 110 billion euro IMF-EU bailout package agreed last year to help the debt-stricken country avoid bankruptcy.

Greece, which is struggling through its fourth year of recession, would have run out of funds by mid-December without the financial aid. The latest disbursement brings to 20.3 billion the sum paid out to Greece so far under the IMF’s 30 billion euro loan.

The IMF approval followed assurances by Papademos and leaders of other parties in the new coalition to stick to terms of the loan deal.

An IMF mission will travel to Athens from December 12 to December 16 for preliminary discussions on economic policies.

Still, Lagarde said economic reforms had to be speeded up to improve Greece’s competitiveness through productivity growth.

She also said private sector involvement and prolonged financial support at low interest rates for Greece from its European partners was essential to cut its debt burden.

Lagarde said a high participation rate was needed in a proposed Greek bond exchange by private creditors to ensure continued IMF support and to meet financing needs by the country.

The government’s privatization program could deliver investment, growth and cut Greece’s debt, she added.


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