Press Release
Press Briefing by Gerry Rice, Director, IMF Communications Department Washington, DC
Thursday, February 11, 2016
MR. RICE: Good morning.
QUESTIONER: Good morning, Gerry. Last Thursday, Ms. Lagarde made an important statement. I can say that she had an important message about Greece. She said, and I quote if you let me, "I have always said that the Greek program has to work on two legs, one leg is of significant reforms, and the other one is debt relief.
We would proceed on that view, significant reform, debt relief. If the pension reform cannot be as significant, substantially, deeply reformed as needed, it will mean more debt relief on the other side."
Can you tell us what Ms. Lagarde's message is? I think the other is the Europeans. What is the message for Europeans, and to the Greeks of course? And if I'm not wrong, it is the first time that she's sending a strong message to Brussels.
MR. RICE: I don’t think it's the first time that the Managing Director of the IMF has sent a strong message to the European partners in the program, and to the Greek authorities. I think what Madam Lagarde said, and what you correctly quoted is -- I mean, I think it's fairly clear. I think it's a balanced message. She's said it many times before, we've said it many times before. It's about the program standing on what we've called the two legs of the reforms, and then financing, debt relief on the other side.
So, you know, I think she was describing that calculus of the reforms on one side, and the financing and the debt relief on the other. And you know, there's a tradeoff between the strength of the reforms, and the debt relief, that Greece and its European partners can agree on. Even with strong reforms, we have said, Greece will need significant debt relief to ensure debt sustainability.
And the corollary of that, if reforms are weaker, then more debt relief could be required, and I think Madam Lagarde said that too. Again, the risk of repetition, we've said, it has to add up, the program has to add up. We can work with a combination of reforms and debt relief, but what we need to see, is overall a credible package of policies, and debt relief for our staff to recommend the program to our Board. I think it was pretty clear but that may help.
QUESTIONER: It is very clear. And I have another question, she told us on Thursday also, what you said, but it needs to adapt, and the pension system needs to be reformed. The tax collection system needs to be improved so that the revenue comes in, evasion is stopped, and debt relief by the other Europeans must accompany this process. So, again, there is a message here, and if you can tell us what is the message, exact message.
MR. RICE: Again, I think, pretty clear as you’ve quoted it. Madam Lagarde was actually speaking in the context of a question about the -- Is the IMF requesting excessive fiscal consolidation, and what she said was, the IMF does not want to see excessive fiscal consolidation. In fact, and we've discussed this in this room over the years. You know, over the span of our engagement with Greece, the IMF has been the one at the table, you know, arguing for a fiscal adjustment path that is more supportive of recovery in the short-term, and more realistic in the medium term.
So I think what she has been reiterating was that, you know, to achieve that we need the package of realistic policies. Pensions are important to that, but as she also pointed out, and again, we've been saying this for many years, the tax system is a very important part of this as well, particularly on the issue of tax evasion, and the issue of trying to ensure that everyone pays their fair share, so that the burden of adjustment does not fall on low-income, poor people. And we think that’s very important.
And again, to go back on what I said on the first question, those kinds of reforms need to be accompanied by adequate financing, and again, we've been the ones at the table saying, and debt relief, and it's the two legs, and it has to add up, I'm sorry to be repetitive on that, but it's a fairly balanced message and consistent message over time.
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