IMF Signals Greek Debt to Be Dealt With at End of Aid Program

IMF Managing Director Christine Lagarde signaled that Greek debt restructuring can wait and the country should focus on overhauling its economy for the duration of its latest bailout, which expires in 2018.

Speaking in a German television interview after meeting Chancellor Angela Merkel in Berlin, Lagarde said “the volume of restructuring will clearly depend on how much reform, how much progress, how strong the Greek economy is” when the aid program ends.

What will probably be needed is a “significant” extension of maturities on Greek bailout loans and a “significant interest rate capping,” Lagarde told ARD television on Wednesday. “That will have to be discussed in greater detail later on” and “implementation of the debt restructuring will have to take place at the end of the program.”

The Washington-based fund is demanding additional debt relief measures as a condition for participating in the Greek bailout. Its participation, in turn, is a condition set by Germany when it agreed to help underwrite the latest aid package in 2015.

Greek bond yields this week fell to the lowest level in almost a month after creditors reached an agreement that would allow auditors of the nation’s bailout to continue negotiations for the release of another emergency loan payment. Euro-area finance ministers and the IMF said that while the agreement signals progress, there’s still a lot of work that needs to be done.