International Monetary Fund (IMF) Director Christine Lagarde said on Thursday that Greece should have a precautionary credit line so that it could regain normal access to the credit markets. Addressing the IMF-World Bank meeting in Washington, she said that an “evolution in the relationship” could be “effective.”
Specifically, the plan would be for Greece to use the remaining $16 billion of the current program as a backstop facility. If Greece doesn’t draw on the backstop facility, then it would be able to reduce its debt load and repayment costs.
This means that there could be more IMF monitoring set to continue until Spring 2016, even after the European surveillance of Greece’s economy ends in December.
Ms. Lagarde’s comments are indicative that the second phase of negotiations between Greece and the troika could be tougher than expected as Greece, bearing in mind recent comments by Prime Minister Antonis Samaras that the country would be able to cover its own funding needs through the bond markets.
Her comments come following European Central Bank (ECB) President Mario Draghi’s statements claiming that Greece needs to be in a monitored program in order to gain access to the ECB’s purchase operations. “No program, no purchases,” he had said during a press conference.
The matter of Greece’s economic reform will further be dealt with on Friday when Poul Thomsen, the Deputy Director of the IMF’s European Department, gives a press conference.
On Sunday, Ms. Lagarde will host a private meeting with Finance Minister Gikas Hardouvelis, Bank of Greece Governor Yannis Stournaras and Mr. Samaras’ advisor Stavros Papastavros. During this meeting, the Greek delegation is expected to outline the government’s plan for an early exit to the bailout.
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