IMF suggests Europe should act to reduce Greece debt
WASHINGTON, United States - The International Monetary Fund suggested Thursday, November 15, that Europe should act to reduce Greece's debt, insisting the Fund itself was not prepared to contribute more to the country's bailout.
The IMF has already extended Greece's rescue loan to four years from three years and lowered interest rates, IMF spokesman Bill Murray said at a regularly scheduled news briefing.
"That's the IMF contribution," he said.
Asked what Europe should do to reduce Greek debt, Murray declined to give specifics, but said: "Presumably, that's who has to take the action."
IMF managing director Christine Lagarde will cut short her Asia visit to attend a crucial eurozone finance ministers meeting on the Greek crisis on Tuesday, November 20, in Brussels, he said.
The meeting was announced Monday, November 12, by Eurogroup president Jean-Claude Juncker, who has clashed publicly with Lagarde over extending the country's agreed debt-to-GDP ratio target of 120% by 2020.
Juncker says the target should be pushed back to 2022. Greece's current level is an untenable 170%.
Despite two EU-ECB-IMF bailouts and a private-sector debt cut, Greece is expected to enter its sixth year of recession in 2013, pushing its debt mountain to 190% of output in 2014.
The official sector holders of Greek debt include eurozone countries, the European Central Bank and the IMF, which have committed a total of 240 billion euros ($307 billion) in rescue loans to Greece since 2010.
Private sector creditors already took a massive write-off of their holdings of Greek debt in the deal struck early this year.
Murray reiterated the debt formula -- "120 by 2020" -- and stressed that the IMF was in "ongoing, active consultations with our partners."
"To get Greece back on a path of growth and job creation... you have to lower its debt-to-GDP ratio in a significant way," he said.
The IMF wants "a real fix" and "not a short-term fix," he said.
The IMF, which has already committed to Greece its largest loan ever -- 28 billion euros or $35.8 billion -- has shown no willingness to move Athens's debt ratio target.
Earlier this week, Greek Finance Minister Yannis Stournaras warned that Greece faces a "very high" risk of default, urging his EU partners to recognize the limits to which his bailed-out country could go in resolving its debt problems.
On the United States' own debt problem, that has left the country hurtling toward a "fiscal cliff" of automatic spending cuts and tax increases at year-end, Murray said the fact that there were discussions on reaching a compromise to avoid it was "heartening."
If not averted, the mandated measures could push the world's biggest economy into zero or negative growth, triggering negative spillovers through the global economy, he said.
"Our message is: Deal with it, expeditiously." - Agence France-Presse