29/05 – IMF’s Lagarde not ruling out a Grexit

In economic news today, media comment on the tight deadline to reach a deal before Greece defaults and on Christine Lagarde’s comments about the possibility of a Grexit. Regarding the tight deadline to reach a deal before Greece defaults, The WSJE, Kathimerini and other media continue to stress the discrepancy between what Greek officials and EU officials have been saying.

“Greece Says Deal Is Imminent, but Doubts Persist,” reads the WSJE headline. Kathimerini reports that the Euro Working Group sent the message that if no agreement is reached by the end of next week, no aid tranche will be paid in June. Star TV says even if the Greek government had the best intentions, it is impossible for the two sides to reach an agreement by Sunday.

Commissioner Moscovici is quoted by a couple of media saying that an agreement is possible, but we are not yet three-quarters of the way there. Sky News features an interview with Commissioner Moscovici on the sidelines of the G7 who says discussions concerning Greece’s national debt are progressing and adds that he and EU finance ministers are also discussing such issues as “VAT, the creation of an independent agency on revenue, non-performing loans.” He also says “we want Greece to stay in the eurozone … we can reach an agreement.”

Meanwhile, Christine Lagarde’s comments about the possibility of a Grexit draw several reports. They were made in an interview with FAZ, and were picked up by several other media outlets. In the interview Christine Lagarde said that it is unlikely that a comprehensive agreement will be reached in the next few days of negotiations. She said that there can be no hurried development of an aid and reform programme, and that the IMF has clear rules.

As Les Echos notes, this is the first time that Lagarde has mentioned such a possibility in such clear terms. In Washington, however, an IMF spokesman was much more measured, pointing out that a Grexit “could obviously have a negative impact on confidence, and the risks should not be underestimated.” The Daily Telegraph also notes that this represents the IMF’s “starkest warning yet that Greece could be forced out of the eurozone.” The Guardian says this illustrates how “the country’s major lenders, of which the IMF is the third largest, are tired of Syriza.”