IMF chief Christine Lagarde evokes possible European effort for Greece - The Best from Greece
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Posted on: 26/Jan/2012
source: http://economictimes.indiatimes.com/news/international-business/imf-chief-christine-lagarde-evokes-possible-european-effort-for-greece/articleshow/11637408.cms
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PARIS: IMF chief Christine Lagarde said Wednesday that European public creditors would need to pitch in and help Greece if banks and insurers did not agree to a sufficient cut in money owed to them.
If private creditors did not successfully negotiate a sufficient debt writedown with Greece, then "public creditors ... will also have to contribute to the financial effort," Lagarde told reporters in Paris.
She spoke following a report in Wednesday's edition of the Financial Times that said the IMF was pressing the European Central Bank to forego potential profits on 40 billion euros ($52 billion) in Greek debt it holds.
Lagarde did not comment directly on the report, and said that "the IMF is only an observer within the framework of the negotiations between the private sector and Greek debtors."
Lagarde also said that if the European Union managed to set up an effective firewall to protect larger economies such as those in Italy and Spain against market speculation, then non-eurozone countries would contribute to it.
With regard to the most pressing eurozone debt issue, "our requirement is that Greece is on a sustainable (financial) path by 2020," the IMF chief said.
The IMF would like to see Greece's debt, currently around 160 percent of gross domestic product at some 350 billion euros, brought down to roughly 120 percent of GDP.
Greece is holding talks with private creditors to cut the 200 billion in debt they hold in half. However, discussions have been held up in part by differences on the interest rate to be applied to future Greek bonds.
The lead negotiator for banks and insurers in the negotiations, Charles Dallara, is due back in Athens on Thursday, government spokesman Pantelis Kapsis said Wednesday.
Kaspsis said the talks had entered "the most delicate" stage and added that "our goal is to conclude (them) during the week."
Athens faces a February 13 deadline, by which time an official offer is to be launched to exchange old Greek bonds for new ones.
Private banks negotiating the debt reduction were to meet in Paris on Wednesday, a source close to the matter said.
Lagarde said that combined efforts to reach a comprehensive solution would rest on "three pillars," a participation by private creditors, support from public sources, and a new "adjustment programme" to be negotiated with the IMF and European governments.
The IMF chief declined to identify a deadline for the debt talks, saying: "In negotiations one never sets a deadline, even if there is one."
In Athens meanwhile, rebel deputies from both the Socialist Party and three parties on the right blocked moves by the government to pass a reform measure required by the country's creditors.
Deputies opposed a measure overnight Tuesday that would have loosened the opening hours of pharmacies, said a government source quoted by the Ana news agency.
The official blamed what he said was the strong influence of corporations on the deputies and said a revised version of the measure would be submitted to parliament next week.
The clash came as eurozone officials press for a written commitment from the country's government to push through sweeping economic reforms before it agrees to a second bailout of 130 billion euros.
German Chancellor Angela Merkel warned meanwhile against coddling indebted eurozone members in an interview, arguing it was a "disservice" to simply maintain the status quo.
Merkel, who has faced criticism for trying to export the German model of budgetary rigour to the rest of Europe, said she favoured an innovative Europe rather than a Europe that was a "museum for all that was once good".
"I know that means for many a very, very big change, therefore we must support each other," she told a joint interview with six European newspapers.
In Rome, Italian Prime Minister Mario Monti said the outline of a solution to Europe's debt crisis were taking shape thanks to greater willingness by Germany to boost a rescue fund.
"The situation is in evolution.... The contours of a possible way out of the grave crisis that has hit Europe are taking shape," Monti told lawmakers.
The IMF chief declined to identify a deadline for the debt talks, saying: "In negotiations one never sets a deadline, even if there is one."
In Athens meanwhile, rebel deputies from both the Socialist Party and three parties on the right blocked moves by the government to pass a reform measure required by the country's creditors.
Deputies opposed a measure overnight Tuesday that would have loosened the opening hours of pharmacies, said a government source quoted by the Ana news agency.
The official blamed what he said was the strong influence of corporations on the deputies and said a revised version of the measure would be submitted to parliament next week.
The clash came as eurozone officials press for a written commitment from the country's government to push through sweeping economic reforms before it agrees to a second bailout of 130 billion euros.
German Chancellor Angela Merkel warned meanwhile against coddling indebted eurozone members in an interview, arguing it was a "disservice" to simply maintain the status quo.
Merkel, who has faced criticism for trying to export the German model of budgetary rigour to the rest of Europe, said she favoured an innovative Europe rather than a Europe that was a "museum for all that was once good".
"I know that means for many a very, very big change, therefore we must support each other," she told a joint interview with six European newspapers.
In Rome, Italian Prime Minister Mario Monti said the outline of a solution to Europe's debt crisis were taking shape thanks to greater willingness by Germany to boost a rescue fund.
"The situation is in evolution.... The contours of a possible way out of the grave crisis that has hit Europe are taking shape," Monti told lawmakers.
source: http://economictimes.indiatimes.com/news/international-business/imf-chief-christine-lagarde-evokes-possible-european-effort-for-greece/articleshow/11637408.cms
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