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IMF and EU lock horns as Greece given debt extension

by: Investment Week
  • 13/11/2012
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IMF and EU lock horns as Greece given debt extension
A conflict erupted between the IMF and European Union last night as it was announced Greece would receive a two year extension to meet its debt reduction target.

Christine Lagarde, managing director of the IMF, publicly clashed with eurozone finance ministers over a critical target for reducing Greek debt levels, the Telegraph reported. 

Jean-Claude Juncker, president of the Eurogroup of finance ministers, announced Greece would be given an extra two years to meet its debt reduction target of 120% of GDP by 2022 instead of 2020.

However, Lagarde was seen to shake her head and roll her eyes at the announcement that breaches the fund’s condition Greek debt must become sustainable by 2020, the Telegraph reported.

“We clearly have different views,” she said. “In our view the appropriate target is 120% by 2020. It is critical the Greek debt be sustainable.”

The 2020 “debt sustainability” target was agreed as the condition for the IMF’s involvement in the second Greek bail-out agreed in March this year and an EU decision to breach it could jeopardise the whole international package.

Finance ministers will meet again on 20 November to agree the final details on debt reduction and financing of Greek debt before paying €31.5bn in the next tranche of aid.

Meanwhile, just four days before Athens could default, Olli Rehn, the EU’s economic and monetary affairs commissioner, insisted Greece “will be able to roll over T-bills” to fund the government.





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