IMF says it will allow Greece two more years

TOKYO - Agence France-Presse

IMF’s Lagarde says the IMF will give Greece two more years to tame its budget. EPA photo

The International Monetary Fund is happy for debt-battered Greece to have an extra two years to bring its runaway deficit in line with the demands of global creditors, its chief said yesterday.

Christine Lagarde told a news conference in Tokyo it would take time before Athens is able to tame its budget overrun to agreed levels, in comments that add weight to the move to push back a deadline to 2016.

“Instead of frontloading heavily it is sometimes better -- given the circumstances and the fact that many countries at the same time go through that same set of policies with the view of reducing their deficits -- it is sometimes better to have a bit more time,” she said. “This is what we’ve advocated for Portugal, this is what we’ve advocated for Spain and this is what we are advocating for Greece.

 “I have said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation program.” Greece is going through a painful round of austerity and spending cuts imposed on the country in return for promised loans and debt relief worth a total of about 347 billion euros ($448 billion) since 2010. The belt-tightening has forced Greece into its fifth year of recession, with its economy forecast to contract by 3.8 percent in 2013. About one in five people are unemployed in the country.