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IMF Discusses Greek Fiscal Consolidation

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In a German Handelsblatt interview, International Monetary Fund Director Christine Lagarde claimed the agency underestimated the impact of fiscal consolidation on financial growth.

The Director referenced Greece as a primary example.  Lagarde recognized that Europe was improving, but advised against "misleading security" as a result of decreasing bond prices, as reported by ANA. She stated, "The recovery is underway. That is correct...Some countries have successfully implemented the programmes, but that does not mean the crisis is over and our mission accomplished".

The IMF Director added that in Greece, the severe and long crisis resulted in further confusion by investors. Lagarde described, "I am confident that fiscal consolidation and growth-friendly steps do not exclude one another. This is not an easy case, but highly indebted countries cannot avoid a significant reduction of their debt if they want to restore confidence in the markets".

Christine Lagarde further commented, "A country that can raise virtually no money from the markets, cannot afford to promote fiscal consolidation with small steps. This was the case in Greece".