Greece must implement structural reforms, says Lagarde [Update]
Greece needs to implement structural reforms, International Monetary Fund Managing Director Christine Lagarde said on Monday, echoing other international creditors who have urged Athens to implement reforms to secure urgently needed funds.
Leftist Prime Minister Alexis Tsipras’ government won elections in January on a pledge to roll back austerity and renegotiate the terms of a 240 billion euro bailout. But it has faced resistance from euro zone partners who are unwilling to offer major compromises.
Although Athens has been granted a four-month extension to the bailout deal, the Feb. 20 accord did not give Greece access to aid pledged to it from the euro zone and the International Monetary Fund, which has led to a cash crunch.
Lagarde, who is on a two-day visit to India, said that she felt strongly for taxpayers of the debt-strapped euro zone member state, but added the country needed to reduce the fiscal deficit.
“I know how hard it has been for the Greek population particularly the people who pay their tax, particularly the people who are transparent.” she said while interacting with college students in New Delhi.
“Equally, I really strongly feel that economy needs to be transformed, that structural reforms need to take place, that pension schemes need to be stabilised and properly funded because you cannot borrow in future constantly.”
Greek officials held talks with the country’s European Commission, ECB and IMF creditors last week on the left-wing government’s reform plans.
Without those being acceptable to the euro zone, and until their implementation is under way, no bailout money will flow to Greece, leaving it dangerously short of cash.
With money running low, the country’s government has sought to issue more short-term debt, but the European Central Bank has so far refused to give it a green light.
On Monday, Tsipras said Greece would not accept any return to austerity, blaming the bailout policies of the last five years for an unprecedented recession, record unemployment and a humanitarian crisis in the country.
But Lagarde didn’t see any alternative to fiscal reforms.
“Ultimately, you reduce the fiscal deficit that has not been reduced…you have to deal with it,” she said.
“But you deal (with) it in such a way that it becomes sustainable in the medium to long term and the country can stand on its feet, borrow in the international market.”
[Reuters]
