Economy Greek financial crisis: IMF chief admits Greece might leave eurozone

Greek financial crisis: IMF chief admits Greece might leave eurozone

nternational Monetary Fund (IMF) Managing Director Christine Lagarde
nternational Monetary Fund (IMF) Managing Director Christine Lagarde

GREECE could be set to leave the eurozone, International Monetary Fund chief Christine Lagarde has admitted.

But this would not signify an end to the single currency.

Greece’s “potential” exit was flagged after news of the country’s dire financial situation and inability to pay its debts reached a head late this week.

But Lagarde warned it would not be “a walk in the park” for the single currency area, even though it would “probably not be an end to the euro”, she said in comments translated from German in the daily Frankfurter Allgemeine Zeitung.

“It’s a complicated issue and it’s one that I hope the Europeans will not have to face because hopefully they will find a path to agree with the future of Greece within the eurozone,” she said in a statement subsequently issued in Washington to clarify her comments to the German newspaper.

The IMF chief also rejected Athens’ assertion that a deal with its creditors was imminent.

“It is very unlikely that we’ll reach a comprehensive solution in the coming days,” she said.

After positive signals had come from Greece 10 days ago, “we’ve been sobered again in the last week”, Lagarde said.

There was still a lot of work to be done, she said, and the IMF was not prepared to pay out more funds without a clear reform pledge.

“We have rules. We have principles. There will be no half-baked program review,” Lagarde said.

Meanwhile, IMF spokesman William Murray said Greece will be cut off from additional financing if it misses a loan payment to the crisis lender.

“Any country that doesn’t meet its commitment with the Fund … is declared in arrears and they have no access to IMF funding,” he said, adding that he expected Athens would not miss any payments. Greece’s interior minister, Nikos Voutsis, said on Sunday that heavily indebted Greece had “no money” to make a series of repayments to the IMF that are due beginning June 5, totalling 1.6 billion euros ($A2.3 billion).

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