Press Release
Online Q&A Session on Emerging Market Economies with Christine Lagarde
Washington, D.C.
Thursday, February 4, 2016
MR. RICE: Thank you very much. I'm going to take one more question, and I'm going to stay on Europe actually, it's not an emerging market question, and I'm going to break our own rule, if that’s okay with you. But there are many, many questions on Greece, and I'm going to take on question as representative. Just because of the volume.
"Madame Lagarde, it is reported that the IMF is blocking progress in the discussions in Greece, and insisting on extremely harsh pension reforms. Is this a fair description of what is going on? Also, Madam Lagarde, you met recently with Prime Minister Tsipras in Davos. Can you tell us, is the IMF on the same page about which reforms that Greece needs to do, when it needs to do it, and in order to get the IMF aboard for the Greek Program?"
MS. LAGARDE: Okay. I might repeat a few things, but I will also try to drill down a bit. First of all I have always said that the Greek Program has to walk on two legs. I have always said that the Greek program has to walk on two legs: one is significant reforms and one is debt relief. If the pension [system] cannot be as significantly and substantially reformed as needed, we could need more debt relief on the other side. Equally, no [amount of debt relief] will make the pension system sustainable. For the financing of the pension system, the budget has to pay 10 percent of GDP. This is not sustainable. The average in Europe is 2.5 percent. It all needs to add up, but at the same time the pension system needs to be sustainable in the medium and long term. This requires taking short-term measures that will make it sustainable in the long term.
I really don't like it when we are portrayed as the “draconian, rigorous terrible IMF.” We do not want draconian fiscal measures to apply to Greece, which have already made a lot of sacrifices. We have said that fiscal consolidation should not be excessive, so that the economy could work and eventually expand. But it needs to add up. And the pension system needs to be reformed, the tax collection needs to be improved so that revenue comes in and evasion is stopped. And the debt relief by the other Europeans must accompany that process. We will be very attentive to the sustainability of the reforms, to the fact that it needs to add up, and to walk on two legs. That will be our compass for Greece. But we want that country to succeed at the end of the day, but it has to succeed in real life, not on paper.
MR. RICE: Madame Lagarde, thank you very much indeed for spending this time with us. Let me apologize to colleagues if we did not get to all your questions for today. As I said they were voluminous, and we tried to be representative. I hope you all get a chance to look at Madame Lagarde speech, which she gave just a short time ago, at the University of Maryland, which also refers a number of these topics.
I want to thank you for being online with us today, and look forward to seeing you again, soon. Thanks very much.
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