International Monetary Fund Managing Director Christine Lagarde said she is confident euro-area nations will deliver on their pledge to help Greece lower its public debt to the level agreed on in a joint bailout package.
“I stand on the three-times repeated commitments by the euro partners to consider further measures and assistance to make sure that the Greek debt is reduced substantially” by 2020 and 2022, Lagarde told reporters in Washington today. “I have no reason to believe the Europeans would not themselves deliver on their undertaking vis-a-vis Greece and vis-a-vis third parties.”
The IMF and euro-area nations over the past week have unblocked the latest aid tranche to replenish Greece’s coffers through the German elections in September.
The Mediterranean country’s financial fate has become entwined with German politics, with Chancellor Angela Merkel campaigning for a third term on the promise Germany won’t write off any of the loans made to Greece since the debt crisis broke out almost four years ago.
IMF staff in a report published yesterday said there are about 11 billion euros ($14.5 billion) in financing needed for Greece by the end of 2015 that have not yet been indentified under its joint package with Europe. The report also reminded European officials of their commitment to reduce Greece’s debt burden to a target of 124 percent of gross domestic product by 2020, which they said may require agreeing to relief measures as early as next year.
European finance ministers agreed last year to cut the rates on bailout loans and suspend interest payments for a decade, while giving Greece more time to repay and engineering a Greek bond buyback. German Finance Minister Wolfgang Schaeuble last month opened the possibility of building on these measures while discarding a straight writeoff.
“What channel it will take, what tools will be needed, what methodology will be applied is something that will have to be discussed by the euro partners, and with the euro partners, but the commitment is in my view what matters most,” Lagarde said.
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