Bloomberg News

Greece Debt Reduction Talks ‘Not Deadlocked,’ IMF Says

November 15, 2012

The International Monetary Fund said talks over Greece’s debt-reduction plans aren’t deadlocked, even as the fund disagrees with its European partners over the timetable.

IMF Managing Director Christine Lagarde is cutting short a trip to Southeast Asia to attend a meeting of euro-area finance ministers on Greece on Nov. 20.

Finance officials from the 17 euro countries are seeking agreement on how to cut Greece’s debt to sustainable levels, a necessary step to disburse the next tranche under a bailout they co-fund with the IMF. A disagreement on the speed of reaching the debt-reduction targets broke out this week.

“We want a real fix, not a short-term fix,” IMF spokesman William Murray told reporters in Washington today.

“Critical to us is Greece’s debt sustainability,” Murray said. “That means that by 2020 we want to see Greece’s debt at 120 percent of its gross domestic product.”

The European finance ministers decided this week to postpone that goal by two years to 2022.

The IMF has previously extended the maturity and lowered the interest rate on Greek debt, Murray said. “That is what we can do in the context of our framework,” he said.

In March, the IMF approved a four-year extended fund facility for Greece, which carries a lower interest rate than a three-year stand-by arrangement that the country had previously.

Separately, Murray said that potential global spillover effects from the U.S. going over the so-called fiscal cliff of $607 billion in tax increases and spending cuts could be “very significant.”

To contact the reporter on this story: Kasia Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net


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