Creditors at odds on Greek debt


Greece’s creditors remain at loggerheads over the sustainability of the country’s debt, as on Thursday the International Monetary Fund insisted at the opening of its annual meeting that the debt is not viable as it is, while eurozone officials lambasted the Fund for its pessimism.

Questioned by Kathimerini about the eurozone officials’ call for the Fund to back down on its debt lightening demand, IMF Managing Director Christine Lagarde said, “We have displayed flexibility in the past in assessing the sustainability of the debt, but we clearly believe that as it is the debt is not sustainable.”

The French official added that the conditions for the IMF’s participation in the Greek program “have not changed. We believe that very significant structural reforms must be made and we also believe that the debt has to become sustainable in the future.”

The European response came by way of European Commission Vice President Valdis Dombrovskis’s speech at the Peterson Institute: He admitted there is concern about the Greek debt sustainability, but added that in the past the IMF was not vindicated for its excessive pessimism.

A little earlier US Treasury Secretary Jack Lew had pressed for an agreement on the restructuring of the Greek debt as soon as possible, noting that its timing remains open. On the other hand, European Economic and Monetary Affairs Commissioner Pierre Moscovici described a program with many conditions, including rebuilding confidence in the economy and the success of the bailout program, in order to reach a global agreement on the debt. He insisted the IMF must form part of the program and that the bailout targets have to be met.

Lagarde added that the recent IMF assessment of the Greek economy showed much work remains to be done on the reforms front, and announced the mission of an IMF team to Athens in two weeks’ time – on October 17, sources say – so as “to help in the assessment of commitments undertaken in the context of the program.”