Before Merkel talks, Lagarde calls for debt relief, reforms


In comments ahead of a key meeting with German Chancellor Angela Merkel in Berlin Wednesday, International Monetary Fund chief Christine Lagarde sent messages to both Athens and Brussels, calling for a Greek debt restructuring while underlining the need for “significant progress” on reforms.

Speaking to Germany’s ARD television, Lagarde said the IMF was “much more confident after the progress made by the Greek authorities” but that reforms were urgently needed in crucial areas, chiefly in Greece’s pension and income tax systems.

“At the present time, no haircut is needed,” she said, adding that she did see the need for debt restructuring to be implemented at the end of the current bailout program as well as possible interest rate cuts.

“What will be needed is not a haircut if the reforms are done, but a significant extension of maturity, a significant interest rate capping, and that will have to be discussed in greater detail later on as progress is made on the reform front,” she said.

Merkel and Lagarde were not scheduled to make statements to the media after their meeting, which was being closely watched by officials in Athens and Brussels.

Later on Wednesday night Merkel was expected to host a dinner for European Commission President Jean-Claude Juncker.

In Athens, government officials have been scrambling to present something more concrete than the rather vague agreement reached at Monday’s summit of eurozone finance ministers in Brussels.

It appears likely that the substance of the deal – the size of the budget savings and where the ax will fall – will become clearer next week when technical staff representing Greece’s international creditors are expected to return to Athens to resume bailout negotiations.