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We need to somehow restructure significantly the Greek Debt

16 July 15 | Cristine Lagarde
Cristine Lagarde

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Christine Lagarde, Managing Director of the International Monetary Fund (IMF), on Friday reiterated the IMF's position that it was necessary to "restructure Greece's debt to ease the burden".

 

Lagarde said the solution recommended by the IMF was "to significantly extend maturities, also lengthen the grace period during which no refund is made, and reduce the interest up." "We believe that by using these three methods of really significant way may be enough to make the debt bearable" said Christine Lagarde.

In other words, "a debt sustainability, one can quite achieve it by other methods than a straight cut on the amount of debt".

For Christine Lagarde, the agreement reached Monday between Athens and its creditors is only "the beginning of an adventure." "Let's be clear, we do not reach the end of a process. It is a process that opens, on a very tight schedule with an enormous challenge," she warned.

Negotiations on specific terms of the new aid plan will last "at least four weeks," according to the boss of the IMF. "It will not be a bed of roses, it will be complicated, it will be laborious."

Commenting on a Greek government plan to reopen banks on Monday, the IMF's head said: "The measure taken by Greek authorities to close the banks was a measure absolutely necessary," said the general director of the IMF.

"As much that extent was totally legitimate and protecting savers and depositors, as the action may be taken on Monday is also reassuring. It will mean that confidence is starting to build."

Responding to criticism over the IMF's role since the beginning of the crisis, Lagarde said: "In 2010, I was not director general of the IMF, I was Minister of Finance and I was not particularly favorable to the IMF's involvement because I hoped at the time that we can solve the problem among Europeans. We did not succeed at that time".

"At the time, I think that there was no choice but to take a very firm line on deficit reduction," she added.

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