EU and IMF divided over how fast Greece needs to reduce debt burden

Tuesday 13 November 2012 20.42
Jean-Claude Juncker clashed publicly with Christine Lagarde
Jean-Claude Juncker clashed publicly with Christine Lagarde

A significant difference has emerged between the European Union and the International Monetary Fund over how fast Greece needs to reduce its debt burden.

The dispute became public following a meeting of eurozone finance ministers in Brussels last night.

While the government in Greece seems likely to secure €31bn in promised bailout funds within a week or so, the country's international lenders have clashed over the longer-term date to reduce the country's debt.

The most immediate problem facing Greece was apparently solved last night.

EU Commission Vice-President Olli Rehn told journalists that Greece would be able to refinance €5bn worth of treasury bills by Friday, although he did not explain how this would be done.

Both EU and IMF officials have praised Greek politicians for agreeing on more than €9bn of spending cuts over the next two years.

The head of eurozone finance ministers, Jean-Claude Juncker, said this should mean Greece secures more than €31bn in badly-needed bailout funds by 20 November, if certain remaining but unspecified conditions are fulfilled.

Unusually at the news conference, Mr Juncker openly clashed with the head of the IMF, Christine Lagarde, over the longer-term time-table to reduce Greek debt.

Mr Juncker said ministers wanted to change the EU/IMF target for Greece to reduce its debts to 120% of gross domestic product from 2020 to 2022.

Yet, Ms Lagarde stated bluntly that the IMF remained of the view that the 2020 target was appropriate.

When Mr Juncker said "I'm not joking", Ms Lagarde shook her head.

The Minister for Finance, Michael Noonan, has predicted that the dispute will be resolved over the coming week.

He described the row as “nothing very unusual in my experience”.

Mr Noonan said there had not been a lot of differences over Greece during discussions last night, and he presumed any remaining problems would be resolved.

Asked about Ireland's campaign for debt relief, Mr Noonan said that the subject wasn't discussed as part of the main agenda and that there had been “no particular advance made”.

However he raised the issue with his colleagues on an individual basis.

Mr Noonan was speaking in Brussels after leaving the meeting of all 27 EU finance ministers to return for Dáil business.

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