Wednesday

8th Jul 2020

Lagarde: No IMF in Greek bailout without debt relief

  • 'It will not be a road paved with roses', said Lagarde (Photo: Consillium)

The International Monetary Fund (IMF) will take part in a third Greek bailout only if there is a "complete" programme including a restructuring of Greek debt, the IMF director Christine Lagarde said Friday morning (17 July).

The up-to €86 billion bailout plan "is not viable" without debt relief, Lagarde told France's Europe 1 radio.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"That is why European countries admitted the principle of debt relief" in the euro summit statement signed Monday (13 July), she added.

While several eurozone countries, including Germany, are opposed to a haircut on the Greek debt, "there are other modalities", Lagarde said.

She did not say how much debt relief is needed, but she said three methods could be used "to make the Greek debt sustainable".

Greece's creditors - the EU, the IMF and the European Central Bank (ECB) "could significantly extend maturities, also extend the grace period when no repayment is done, and compress interest to the maximum," she said.

In any case, the IMF chief said, her institution will take part only if there is "a complete programme".

"A complete programme stands on two legs," she said.

"The first leg is a Greek leg: deeply reform the economy and hold a healthy fiscal line. The second leg is the creditors' leg: provide financing and restructure the debt to lighten the burden."

"This is not a whim," Lagarde said. "There are rules which are applied to all IMF member states."

The Eurogroup gave the green light on Thursday to open bailout negotiations when all eurozone member states have approved the euro summit agreement.

The European Stability Mechanism (ESM), the eurozone emergency fund, said Thursday it would provide €50 billion for the bailout.

ESM chief Klaus Regling said the remaining €32-36 billion needed to complete the bailout programme would be provided by the IMF, as well as privatisations and a possible Greek return on financial markets.

Bailout negotiations "will be laborious," Lagarde warned in her interview.

"We are not at the end of a process yet. A process is opening, with a very tight agenda and a huge challenge," she said.

"It will not be a road paved with roses."

Greek MPs pass bailout austerity laws

Greek MPs adopted laws needed for third bailout, amid bitter debate, and amid fresh German remarks that a Greece euro-exit might be best.

UK to accept Greek short-term loan

The UK will not oppose a €7bn emergency loan for Greece, following an EU commission deal which interweaves Grexit and Brexit.

Germany approves talks on new Greek bailout

The Bundestag Friday voted to open negotiations for a third aid programme for Greece but the number of rebel centre-right MPs voting No grew from 29 in February to 60.

Greece to get €7bn loan on Monday

EU member states agreed on the modalities of a short-term financing which will allow Greece to repays its debt to the IMF and ECB.

Debt relief open to Greece, says Merkel

Greece could receive relief on its debt mountain within months as soon as creditors confirm that it is making good on promised economic reforms, Angela Merkel has said.

News in Brief

  1. France and Germany warn Israel on annexation 'consequences'
  2. Shipping firms to face EU carbon regime
  3. EU to mediate between Greece, Cyprus, and Turkey
  4. EU to unveil arms-trafficking and drug proposals
  5. EU to discuss people-smuggling with African states
  6. 'Torture chamber' found in Dutch sea containers
  7. Commissioner backs under-attack Hungarian news site
  8. New French government tilts to right

Coronavirus

EU leaders to reconvene in July on budget and recovery

Most EU leaders want an agreement before the summer break, but the Dutch PM, leading the 'Frugal Four', warned there might not even be a deal then. But the ECB's Christian Lagarde has warned of a "dramatic" economic fall.

Coronavirus

EU leaders seek to first narrow differences at summit

EU leaders on Friday will share their takes - online - on the €750bn recovery and €1.1 trillion budget plans, before they try to seal the deal at one or two likely head-to-head meetings in July.

Stakeholders' Highlights

  1. UNESDANext generation Europe should be green and circular
  2. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  3. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  4. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  5. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  6. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis

Latest News

  1. The opportunistic peace
  2. EU mulls new system to check illegal pushbacks of migrants
  3. EU forecasts deeper recession, amid recovery funds row
  4. Revealed: fossil-fuel lobbying behind EU hydrogen strategy
  5. Commission chief under fire for Croatia campaign video
  6. Parliament vaping booths 'too confidential' to discuss
  7. Belarus: Inside Lukashenko’s crackdown on independent voices
  8. The rationale behind US troop withdrawals from Germany

Join EUobserver

Support quality EU news

Join us