IMF chief Christine Lagarde offered something of a compromise on Monday to overcome the current "tug-of-war" between the Fund and European creditors – primarily Germany – over the Greek bailout, saying the IMF would remain in the program but would only resume lending when debt relief is given to Athens.
The latest conundrum involving the Greek bailout – the third since 2010 – revolves around the Fund’s demand that the country’s debt be rendered sustainable, whereas Berlin wants high annual fiscal targets and reforms aimed at high growth rates in order to preclude the need for debt restructuring or worse, a “haircut”.
“If the creditors are not yet at that stage where they can agree on and respect our assumptions, if it takes them more time to get there, we can acknowledge that and give them a bit more time,” she told the German financial daily.
Handelsblatt reported that such a compromise could allow euro zone finance ministers approve the next tranche of bailout loans for Greece during a June 15 Eurogroup meeting.
"It is a possibility for an agreement," Lagarde said.