Lagarde says Greek program should be "rooted in reality"

Sun Nov 18, 2012 3:00am EST
 

By Lesley Wroughton

MANILA (Reuters) - An agreement among Greece's creditors on how to reduce its large debt pile should be "rooted in reality and not in wishful thinking," the head of the International Monetary Fund said as she heads into a tense meeting with European leaders.

Christine Lagarde, the IMF's managing director, canceled the last leg of her visit to Asia, skipping a Southeast Asian summit in Cambodia, to return to Brussels for a meeting on Tuesday of the Eurogroup on Greece.

As she left the Philippines, Lagarde told Reuters she would push for a permanent solution to Greece's debts to avoid prolonged uncertainty and further damage to the Greek economy.

To Lagarde, that means countries in the euro zone should send a strong signal they remain committed to Greece by agreeing to reduce the debt Athens owes them.

"I am always trying to be constructive but I am driven by two objectives," she said in an interview, "to build and approve a program for Greece that is solid, that is convincing today, that will be sustainable tomorrow, that is rooted in reality and not in wishful thinking.

"The second objective is to maintain the integrity, credibility and quality of advice that we are giving, not for the Fund itself, which obviously is a concern of mine, but to lend that to the Europeans because that is what they are interested in," she said late on Saturday.

In an unusually public airing of disagreement that flared during a news conference in Brussels on November 13, Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, said the target of reducing Greece's debt to 120 percent of gross domestic product by 2020 should be moved by two years to 2022.

Appearing surprised by Juncker's statement, Lagarde disagreed, insisting the target of 2020 should remain.   Continued...

 
International Monetary Fund Managing Director Christine Lagarde gestures during a Reuters interview at a hotel in Manila's Makati financial district November 17, 2012. REUTERS/Cheryl Ravelo