IMF warns of Greek debt relief
January 19, 2015
The head of the International Monetary Fund cautioned against the possible restructuring of debt for Greece and other eurozone member states, saying there would be consequences.
"As a principle, collective endeavors are welcome but at the same time a debt is a debt and it is a contract," IMF Managing Director Christine Lagarde told The Irish Times in an interview Monday.
Ahead of the January 25 national elections, Greece's left-wing party Syriza had called for an international conference to restructure the country's debts - perhaps even writing them off in part. Other government sources had said such a forum would also reconsider the debts of other countries in the eurozone, like Ireland and Portugal.
Syriza's leader, Alexis Tsipras, suggested a program modeled on the 1953 London conference, in which Western powers agreed to cut half the debts of West Germany - thus facilitating the country's return to economic prosperity after the Second World War.
But Lagarde warned against such a scheme.
"Defaulting, restructuring, changing the terms has consequences on the signature and the confidence in the signature," she said.
The newspaper added Lagarde reserved judgment on whether Greece's mountain of debt, now at 175 percent of annual economic output, was sustainable.
el/hg (Reuters)