Eurogroup Finance Ministers and the IMF Disagree on Greece Recovery Strategy

on Nov 13, 2012

Greece’s next aid payment is still not secure – finance ministers of the Eurogroup and the head of the International Monetary Fund (IMF) have clashed over how long Athens should be given to lower its debt.

**Lagarde vs Juncker**
Christine Lagarde, head of the IMF, said she believes the current due date of 2020 for Greece to reduce its debt levels to 120 percent of GDP should remain unchanged.
At a post-meeting press conference Jean-Claude Juncker, president of the Eurogroup, disagreed and stated that the target should be moved to 2022. His words visibly angered Ms Lagarde who insisted the IMF intends to stick to the original timeline.

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“In our view the appropriate timetable is 120 percent by 2020. We clearly have different views. What matters at the end of the day is the sustainability of Greek debt, so that that country can be back on its feet and re-access the private market in due course.” Ms Lagarde said.
Concerns about debt sustainability, or the country’s ability to service its huge debt over a set period of time and then pay it down, are expected to be addressed by a much-anticipated but as of yet incomplete report from the Greek troika – the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF).

**Greek Austerity Measures Praised But Insufficient in the Long-Term**
Some of the finance ministers of the creditor countries praised Greece’s austerity efforts at the meeting. Pierre Moscovici from France spoke of the country’s “courageous” efforts, saying that Greek people have earned more help. Mr Juncker was more cautious by saying that the troika report “is positive in its fundamental tone because the Greeks really delivered.” Ms Lagarde said “Greece has done an awful lot of work and shown real resolve. It’s now for the creditors to do the same,”!m[](/uploads/story/792/thumbs/pic1_inline.png)

Greece faces a €5 billion bill redemption on 16 November and with no decision on whether it should receive the aid, Athens is left scrambling to meet its obligations. The country is issuing short-term paper to stay afloat. It is expected to sell one- and three- month T-bills later today to refinance the debt with maturity of 16 November.
Dutch Finance Minister Jeroen Dijsselboem said the Friday deadline won’t force Eurogroup finance ministers to rush a decision. “We’ll not put ourselves under time pressure. If more time is needed, we’ll take it. If I have to travel back and forth another two or three times before we come to a decision, I will do that.” he said. “The Greeks have left a lot of things until the last minute, so we’ll also take the time to consider where we are.”

Wolfgang Schäuble, the Finance Minister of Germany, also stressed that he will not be swayed by looming deadlines. When at the press conference he was asked about Greece’s immediate problems, he answered stoically, “We have to be thorough.”
Rescue loans for Athens have been held up since Greece went off-track with promised reforms and budget cuts, partly as a result of holding two elections in the space of three months. Reuters reported that according to three EU officials Greece’s debt burden will fall only to 144 percent of GDP in 2020 and about 10 percentage points more in the additional two years Mr Juncker wants to give them.


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