IMF head Lagarde disputes EC forecasts and effectiveness of measures

IMF threatens to leave Greek program, if debt relief not discussed

IMF Director Christine Lagarde has openly disputed the forecasts by the European Commission that Greece would achieve a 3.5% GDP primary surplus in 2018, in a letter sent to the 19 Euozone Finance Ministers, ahead of Monday’s Eurogroup meeting. Lagarde calls for an immediate discussion on a Greek debt relief, threatening that the IMF will bail out of the Greek program. According to newspaper ‘Financial Times’ (FT), Lagarde doubts the primary surplus could be reached in her letter, because it is based on imposing huge taxes on a limited tax base and one-off ’emergency measures’ proposed by the Greek government. ‘Unfortunately, the emergency revenue collection mechanism Greece has proposed does not include specific economic reforms’, the letter says, according to FT. Lagarde continues by stressing that the IMF will only support a new Greek program, if the European partners on board the rescue plan base their funding and a debt relief on realistic fiscal targets backed by reliable measures. Lagarde is effectively doubting the figures presented by the European Commission dubbing them unrealistic, a dispute that will set the tone of talks on the May 9 Eurogroup meeting, the agenda of which was presented by Eurogroup head Jeroen Dijsselbloem.