In order IMF to participate in the third bailout program of Greece, the country needs to “walk on two legs: strong structural reforms and a debt that is sustainable”, International Monetary Fund Managing Director Christine Lagarde says during her interview to the Center for Strategic and International Studies, March 7.
Lagarde’s answer when asked about Greece and IMF’s stance:
“Our assessment is that for that economy to be part of the euro area, which is a currency zone, clearly it has to implement, deliver and follow through strong structural reforms that will equip the country to be more competitive, to be more productive and to have a sustainable growth over the course of time.
So, that’s one set of things.
Second, given that the monetary policy is determined for the whole of the euro area, we believe under current circumstances and given the tracked record of that country that it is carrying to much debt. And for us to get involved and to provide financing that debt needs to be sustainable.
As a result, either we cannot provide financing and the Europeans have to sort it out or if we are all providing financing then the dept has to be sustainable. And for the debt to be sustainable it has to be reduced in terms of dept services and in terms of dept overall.
And that can be done by combination of things which include extension of maturity over long period of time and reduction and capping of interest rates over a long period of time as well.
This is what we are discussing at the moment and what I call ‘walking on two legs’: The strong structural reforms and a debt that is sustainable.”