Christine Lagarde hints IMF may give up on Greece’s bailouts

Last year’s €86 billion rescue deal to keep Greece in the eurozone may need to be reworked for the International Monetary Fund to take part. The fund’s chief Christine Lagarde said forcing Athens to stick to such a steep budget surplus was “highly unrealistic” and would require “heroic” efforts by the Greek people.

Her comments are the clearest sign yet that Ms Lagarde could consider giving up on Greece’s bailouts after six years in which the fund’s reputation has taken a battering.

Although eurozone and Greek officials signed up to the bailout last July, the IMF never agreed to its terms. Germany has warned it may not support the deal if the IMF quits.

However, although she refused to say how the IMF would stay involved, Ms Lagarde said yesterday “we will not walk away” from Greece. The IMF and the Greek government are in the middle of a hostile war of words over the future of the programme, which must be decided before €3.5 billion in debt payments fall due in July.

Under the terms of the bailout, Greece agreed to pass tax increases, spending cuts and economic reforms to let Athens reach a primary surplus of 3.5 per cent of economic output by 2018.– (Copyright The Financial Times Limited)