Lagarde seeks more time on deficits


International Monetary Fund managing director Christine Lagarde today said struggling European countries such as Greece and Spain should be given more time to reduce their budget gaps.

Both economies are at the centre of the euro zone debt crisis, with Greece struggling to fulfil a debt-reduction programme and Spain inching towards seeking aid to handle its debts, having already obtained a €100 billion credit line for its banks in June.

"Instead of frontloading heavily, it is sometimes better, given circumstances and the fact that many countries at the same time go through that same set of policies with a view to reducing their deficit, it is sometimes better to have a bit more time," Ms Lagarde said at a news conference in Tokyo.

"That is what I have advocated for Portugal, this is what I have advocated for Spain, and this is what we are advocating for Greece, where I said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation programme that is considered."

A report on the Greek programme from the European Commission, the European Central Bank and the IMF - known as the troika - is due in the next few weeks.

European officials said on Monday divergences had emerged inside the euro zone and with the IMF over how best to proceed, especially on whether Athens should obtain some respite in its deficit-cutting efforts.

Spain is also under pressure as the IMF, the Bank of Spain and many economists have said that the economic forecast the government used to build its budget plan for 2013 was too optimistic, putting the country at risk of missing its deficit targets.

The IMF forecast Spain's economy would shrink 1.3 per cent next year, which compares with a forecast for a 0.5 per cent contraction used in next year's budget.

Spain's economy minister Luis de Guindos on Monday said Madrid would stick to its targets and was not planning any further cuts. The euro zone has already eased fiscal targets for Spain once this year.

On Monday, the euro zone gave Portugal one more year, until 2014, to get its budget deficit below the European Union ceiling of 3 per cent of gross domestic product.


The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Screen Name Selection


Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.