Lagarde Says She’s Not in Mood for Greek Renegotiation

IMF Managing Director Christine Lagarde
Christine Lagarde, managing director of the International Monetary Fund, speaks during a press briefing on the U.S. economy in Washington, D.C. on July 3, 2012. Photographer: Joshua Roberts/Bloomberg

International Monetary Fund Managing Director Christine Lagarde said she is not in the mood to renegotiate the terms of Greece’s bailout agreement.

“I am not in a negotiation or renegotiation mood at all,” Lagarde said in an interview on CBNC television today. “We are in a fact-finding mood.”

Officials from the IMF, European Central Bank and the European Commission begin a visit to Greece tomorrow to assess the country’s progress in implementing the terms of its second international bailout, commission spokesman Simon O’Connor told reporters in Brussels. Greece will tell its creditors that high unemployment and recession necessitate changes to the country’s bailout agreement, government spokesman Simeon Kedikoglou said.

“I’m sure that they will have excellent numbers to show in various directions,” Lagarde said in the CNBC interview. “I’m very interested in seeing what has been done in the last few months in terms of complying with the program.”

Greek Prime Minister Antonis Samaras put together a coalition government after his New Democracy party won June 17 elections on pledges to renegotiate parts of the 130 billion-euro ($164 billion) second bailout from the European Union and the IMF. An inconclusive poll on May 6 led to the June vote and fanned concern over a Greek euro exit.

Last month, an IMF spokesman said a fund team may start negotiating possible changes to the conditions attached to the loan to Greece after the fact-finding mission visits Athens.

Program Objectives

“The objectives of the program as agreed remain the basis for those discussions,” IMF spokesman Gerry Rice told a news briefing on June 28. “If the new government has ideas on how those program objectives can be achieved, we’re open to those discussions.”

In today’s interview on CNBC, Lagarde said that “it’s not enough” for Europe to plan a banking union. “We think that fiscal union is the next step that they need to explore,” Lagarde said.

The IMF chief said “maybe one day” there will be one single debt agency for the whole euro zone, and “maybe one of these days” one single finance minister for the region bound by a common currency.

“It’s not going to happen overnight, but it would clearly take that monetary union towards a much more united territory,” she said.

European stocks climbed, posting their biggest three-day rally this year.

The Stoxx Europe 600 Index climbed 1 percent to 257.39 at the close, completing a three-day gain of 5.2 percent, the gauge’s biggest since November. The benchmark measure has rallied 10 percent from this year’s low on June 4 as euro-area leaders opened the door to directly recapitalizing lenders using the European Stability Mechanism, the currency zone’s permanent bailout fund.

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