Lagarde seeks to reassure Greek PM following leaked IMF discussion on bailout

4 Apr 16

International Monetary Fund managing director Christine Lagarde has dismissed allegations that the fund is trying to push Greece to default as “simply nonsense” in a letter to Greek prime minister Alexis Tsipras.

The correspondence comes after Wikileaks published the transcript of a phone call Poul Thomsen where IMF officials discussed how to put pressure on Greece, the European Union and Germany to bring the country’s bailout negotiations to a close.

The conversation is reported to involve Poul Thomsen, head of the IMF’s Europe Department, and Delia Velculescu, chief of the IMF mission to Greece.

They speculate about what could bring the sluggish bailout talks to a conclusion, and suggest a crisis event may be necessary for eurozone governments to finally settle on the big decisions.

“In the past there has been only one time when the decision has been made and that was when they were about to run out of money seriously and to default,” Thomsen is reported to have said.

Greece has interpreted the remarks as a plan by the fund to draw out negotiations on whether the IMF will take part in the eurozone’s latest bailout of the country until July, when the government’s next big debt payment is due.

The country believes this would give the IMF more leverage to make Germany compromise on the debt relief programme Greece needs to recover.

Outspoken former Greek finance minister Yanis Varoufakis said the IMF is planning to stall to “bring Greece to its knees (again!) in order to force Angela Merkel’s hand”.

“It’s time to stop Greece’s fiscal waterboarding by an incompetent, misanthropic troika.”

The leak prompted an emergency meeting of the Greek government but their response was more measured. Tsipras wrote to Lagarde on Saturday to express his “deep concerns” around whether Greece can “trust, and continue negotiating in good faith” with the IMF.

In her response, Lagarde agreed that the leak of the transcript had damaged trust between the two and said it had made her question whether progress can be achieved “in a climate of extreme sensitivity to statements of either side”.

However, she continues to say the team has her full confidence and personal backing and that she has decided to send them back to Athens to continue the discussions.

“Any speculation that the IMF would consider using a credit event as a negotiating tactic is simply nonsense,” she wrote.

She went on to say the IMF “conducts its negotiations in good faith, not by way of threats, and we do not communicate through leaks.”

While agreeing that it was in the interest of the Greek people for the negotiations to come to a “speedy conclusion”, she said in her view the talks were “still a good distance away” from producing a coherent, credible and realistic programme that can be presented to the fund’s executive board.

Some commentators see the leaked transcript as the clearest sign yet that the IMF is looking for an exit route from the messy and heavily criticised bailout programme, worth €86bn, and leave the EU to resolve Greece’s problems. 

Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Related jobs

Most commented

Events & webinars