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Lagarde tempers assumption of IMF role in third Greek bailout

(London Post)    A day after Greece assured eurozone officials of its conviction that the IMF have a role in a third bailout, the fund’s chief, Christine Lagarde, has said it may need months to decide whether to get involved at all.

In an interview with the German newspaper, “Süddeutsche Zeitung,” published on Friday, Lagarde poured cold water on the assumption that the IMF would have a stake in the next 86-billion-euro ($9- billion) bailout for Greece.

She said Athens would have to meet two criteria to convince the IMF.

First, it would have to come up with effective, long-lasting fixes to its cash-strapped retirement system, one of Europe’s most expensive. Second, it would have to show creditors it is capable of getting debt down to sustainable levels.

“It is clear that pension reform is the trigger that will prove that Greece’s economic position is improving,” Lagarde said.

But at the moment, these criteria have not been met, Lagarde said. Realistically, the IMF may need until the second half of 2016 to decide whether it wants to get involved in a third bailout for Greece, the “Süddeutsche” reported.

A welcome about-face

The interview was published a day after the Greek Finance Minister, Euclid Tsakalotos, received praise in Brussels from his eurozone counterparts for saying his government had accepted the IMF’s role in a third bailout program.

Tsakalotos’ assurances marked an about-face in Athens’ position toward IMF involvement. Just last December, Greek Prime Minister Alexis Tsipras said his country’s European creditors should handle the bailout on their own.

Germany, which has insisted the IMF be involved from the beginning, worries that creditors represented by the European Commission alone wouldn’t be strict enough with profligate Greece.

A tough test

Making good on its promises to overhaul spending, Athens submitted a blueprint for how it intends to reform its pension system to officials in Brussels last week.

Greece has one of the most expensive – and, officials often caution, unsustainable – retirement systems on the Continent. Where four workers once paid into the system to support one pensioner, their payments must now suffice for three.

A review of Athens’ reform plans could begin as early as next week, a top European official told a Greek newspaper in an interview on Friday. Passing that review is a prerequisite for talks to start on the debt relief that Greece so badly needs.

“We are ready to start the review as soon as possible, most likely next week,” European Commission Vice President Valdis Dombrovskis told the Greek daily Kathimerini. “But we are not setting any time limit for when the review should be concluded.”

cjc/hg (Reuters, AFP, dpa)

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