BERLIN (Reuters) – Greece doesn’t need a debt haircut at the moment, International Monetary Fund Chief Christine Lagarde said on Wednesday, adding that debt restructuring and interest rate cuts on bailout loans were necessary.
“We are much more confident after the progress made by the Greek authorities to come in the direction of the institutions to satisfy the requirements that we have in order to engage in a program,” Lagarde told German public broadcaster ARD after talks with Chancellor Angela Merkel in Berlin.
She said Greece should implement pension and income tax reforms demanded by the IMF as a condition for taking part in a bailout program.
“Obviously, the second leg is going to be the level of debt that the country can carry out and that debt will have to be restructured appropriately and the volume of restructuring will clearly depend how much reform, how progress, how strong the Greek economy is at the end of the program,” Lagarde said.
“What will be needed is not a haircut if the reforms are done but a significant extension of maturity, a significant interest rate capping and that will have to be discussed in greater details later on as progress is made on the reform front,” she added.
This will have to take place at the end of current bailout program for Greece.
(Reporting by Joseph Nasr; Editing by Toby Chopra)