Press Release: Statement by IMF Managing Director Christine Lagarde on Greece
IMF News, August 14, 2015
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- Published: August 14, 2015
Context and metadata
- Press Release No. 15/381
- Date: August 14, 2015
- Issued by: IMF COMMUNICATIONS DEPARTMENT, Media Relations
- Contact: E-mail: media@imf.org; Phone: 202-623-7100
Assessment of the Memorandum of Understanding (MoU)
- The policy package specified in the MoU recently agreed between the Greek authorities and European institutions, with input from Fund staff, is characterized as a "very important step forward."
- The MoU:
- "reverses much of the policy backtracking that caused the previous program to run seriously off track,"
- "puts in place wide-ranging policies to restore fiscal sustainability, financial sector stability, and a return to sustainable growth."
- Many strong upfront actions to overcome the "serious loss of confidence in recent months" have been fully specified in the MoU.
- Key measures in fiscal structural areas will be implemented as prior actions for the disbursement of the first European Stability Mechanism (ESM) tranche.
Outstanding areas requiring further specification
- Two critical areas need more time for detailed specification by the government:
- Remaining parametric fiscal measures, notably "a sizeable package of pension reforms," needed to underpin the program's "still-ambitious medium-term primary surplus target."
- Additional measures to decisively improve confidence in the banking sector.
- The government has committed to work with its European partners and the Fund to complete these essential reforms "in the coming months."
IMF view on debt sustainability and partner commitments
- The Managing Director's view: "Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own."
- It is "equally critical for medium and long-term debt sustainability" that Greece’s European partners make concrete commitments in the context of the first review of the ESM program to provide significant debt relief, "well beyond what has been considered so far."
Conditional pathway to Fund support
- The Managing Director concludes that:
- Actions to be taken by the authorities by the time of the first review, together with the MoU policies, once supplemented by the outstanding fiscal structural and financial sector reforms and "significant debt relief," will provide the basis for a credible and comprehensive program to restore medium-term sustainability.
- The IMF looks forward to working closely with Greece and its European partners "in the coming months to put in place all the elements needed for me to recommend to the Fund’s Executive Board to consider further financial support for Greece."
Statement by IMF Managing Director Christine Lagarde on Greece, August 14, 2015.