IMF chief backed calls for Greece to have more time

PanARMENIAN.Net - The International Monetary Fund (IMF) head, Christine Lagarde, has backed calls for Greece to have more time to meet the targets of its bailout, according to BBC News.

She said in a BBC debate held in Tokyo that this might be better than "frontloading heavily", or making Greece pay the most upfront.

But the biggest contributor to Greece's bailouts, Germany, rebuffed the idea. "We have to stick to what we announced," Germany's Finance Minister Wolfgang Schaeuble replied.

Greece has asked for two more years to meet the spending cuts demanded by its lenders, which include the eurozone countries through its bailout funds and also the IMF.

Lagarde backed the calls, but Schaeuble stuck to Germany's previous line that on the terms of the 130bn-euro ($168bn) bailout - Greece's second since 2010 - Athens must be held to what it agreed.

At stake is whether Greece should receive the next tranche of the bailout, worth 31.5bn euros, without which it risks running out of money by the end of next month.

Greece's finance minister Yannis Stournaras has been meeting inspectors from the country's international creditors all week in the hope of finalizing a deal before next week's European Union summit.

"We think that an agreement could be close," Simon O'Connor, spokesman for the EU's financial and monetary affairs commissioner, Olli Rehn, said in Brussels ahead of a further meeting between the two sides on Friday, Oct 12 evening.

"I think it's even more important for sustainable growth that investors and consumers have some confidence," he said. "We have to stick to what we announced and we have to implement it step by step. I am optimistic that in one year we will have overcome the most part of the uncertainty related to Europe."

The IMF boss also took a more nuanced approached to austerity - the spending cuts demanded by lenders that have seen several heads of government in Europe ousted and violent street protests from Athens to Madrid.

"If people stay away from the job market, they lose hope," Lagarde said, "which is why it's critical that while maintaining those policies of fiscal consolidation where these are needed, there is also concern for growth, so that jobs can be created. But it's a factor of pace. You know, at which pace does it happen?"

The debate came after Greece on Thursday announced that unemployment in Greece hit a record 25.1% in July, with the level among young people reaching above 50%.

And the nation predicted its economy will shrink by 6.5% this year, much more than previously estimated this year, worse than a previous estimate of 4.8% in March suggested to its bailout lenders.

Greece also said its economy will shrink for a sixth year in 2013.