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Lagarde Says Greece Should Keep its Credit Line

The second round of talks between Greece and the troika is likely to be tougher than expected after managing director of the International Monetary Fund Christine Lagarde indicated on Thursday that Greece should maintain a lifeline with the Fund despite Prime Minister Antonis Samaras’ insistence that the country can cover its financing needs alone.
Speaking at an annual IMF event in Washington, Lagarde acknowledged the desire of Greek officials for an early exit from its loan program with the European Commission, European Central Bank and IMF. But she indicated that the country would still require help to see the crisis through. “In order to deliver a continuous satisfactory outcome, the country would be, in our view, in a better position if it had precautionary support,” she said. “So we are talking about evolution in the relationship. But we believe that the relationship can still be extremely helpful for the country to move on.”
Her comments came a week after ECB President Mario Draghi said Greece must stay in some form of support program if Greek banks’ asset-backed securities are to be eligible for the ECB’s ABS program.
Lagarde’s comments came immediately in the wake of Samaras’ claims that Greece can cover its funding needs by tapping bond markets. “We feel fully comfortable,” Samaras said in a Bloomberg interview when asked if the country could cope alone, adding that halting payouts would not be “a divorce” with creditors. “We want to do it properly,” he said, noting that Athens is willing to discuss some degree of outside monitoring.
The European arm of Greece’s loan program ends in December. But the IMF’s part is set to continue until the spring of 2016, with some 15 billion euros remaining to be disbursed. However, Samaras has proposed that the IMF program end early with Greece forgoing the pending funding and seeking funds from bond markets instead.
A Greek delegation, comprised of Finance Minister Gikas Hardouvelis, Bank of Greece Governor Yannis Stournaras and Samaras’ adviser Stavros Papastavrou, is due to hold talks with Lagarde on Sunday in Washington, where the government’s plan for exiting the bailout early will be presented.

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