Greece’s debt will “have to be addressed” as part of the solution to fix the country’s near-default economy, and the International Monetary Fund is still targeting a debt ratio of 120% of gross domestic product, the head of the IMF said Monday.
“Greece is facing a financing gap, especially if you factor in more time” being considered for Athens to meet its bailout targets, IMF Managing Director Christine Lagarde said at a Peterson Institute for International Economics event.
Earlier Monday, Ms. Lagarde said that the international community must support the euro zone’s ailing economies, including through financing.
IMF and E.U. officials are currently mulling whether to give Athens the next tranche of its much-needed bailout and how to fill the financing gap. Some euro-zone countries, particularly fiscal-hawk Germany, have resisted giving Greece more money and balked at proposals from some economists to restructure Greek debt held by E.U. governments and the European Central Bank.
Ms. Lagarde didn’t elaborate on her comments that Greece’s debt “must be addressed as part of the equation,” or when asked about whether the E.U. and ECB should take losses on their Greek debt holdings.
But Peterson Institute for International Economists senior fellow Jacob Kirkegaard said, “If the IMF’s sticking to the same debt ratio target, then there is no other option but official sector restructuring.”
Mr. Kirkegaard said that wouldn’t likely come now, “but only at a point when there’s more political opportunity.”
(source: dow jones)
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