IMF's Lagarde wants "real fix" for Greece as slowdown spreads

Wed Nov 14, 2012 7:44am EST
 
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By Lesley Wroughton and Niluksi Koswanage

KUALA LUMPUR (Reuters) - Greece needs a lasting solution to its debt burden to avoid a prolonged crisis as Europe's slowdown and U.S. fiscal problems dampen the economic outlook in Asia, International Monetary Fund Managing Director Christine Lagarde said on Wednesday.

The IMF expects a "real fix" for Greece that puts its debt on a sustainable path as quickly as possible, Lagarde said, showing no signs of backing down in a clash with the EU over how Athens can bring its debt down to a sustainable level.

"Obviously, from the IMF's perspective, we expect a real fix, not a quick fix, and that means clearly a debt that is sustainable as quickly as possible," Lagarde told a news conference in Malaysia at the start of a visit to Asia that will also take her to the Philippines and Cambodia.

Euro zone finance ministers have suggested Greece, where the euro zone debt crisis began, should be given until 2022 to lower its debt to gross domestic product (GDP) ratio to 120 percent, but Lagarde has insisted the existing target of 2020 should remain, in an unusually public airing of disagreement.

The IMF is pushing back at having to return to Athens every few months to renegotiate terms of Greece's bailout, which was frozen by elections and slow reforms.

The IMF has pressed Europe to restructure Greece's official debt owed to euro zone nations to reduce the country's debt burden more aggressively. One option is to further lower the interest rate on loans made to Greece and extend the repayment time until the economy is healthy again.

Lagarde said that all of Greece's international partners shared the same goal of ensuring the terms of the country's bailout package were put on track and the country could access financial markets as quickly as possible.

The IMF chief limited questions on Greece to one during the news conference, saying she wanted to focus on her visit to Southeast Asia where economic growth has been driven by domestic demand and has remained resilient despite the global slowdown.   Continued...

 
International Monetary Fund (IMF) Managing Director Christine Lagarde speaks during a news conference in Kuala Lumpur November 14, 2012. REUTERS/Bazuki Muhammad