DUBLIN (Reuters) – The head of the International Monetary Fund warned Greece that there would be consequences to restructuring its debt after elections where opponents of the country 240 billion euro bailout lead in the polls.
Leftist Syriza, which widened its opinion poll lead over the ruling conservatives ahead of the Jan 25 vote, says it will cancel austerity imposed under the bailout and call for an international conference to renegotiate debts of Greece and some other euro zone states.
Its leader Alexis Tsipras has suggested a conference modelled on the 1953 meeting in London at which Western powers agreed to cut the debts of West Germany by 50 per cent after World War Two. In December, he called for a similar “moment of solidarity” with Greece.
“As a principle, collective endeavours are welcome but at the same time a debt is a debt and it is a contract,” IMF Managing Director Christine Lagarde told The Irish Times in an interview on Monday when asked about the general idea of holding a debt conference.
“Defaulting, restructuring, changing the terms has consequences on the signature and the confidence in the signature,” she said.
The newspaper added that Lagarde reserved judgment on whether Greece’s debt pile, at 175 per cent of annual economic output economic output, is sustainable.
It also quoted her as saying the broad endorsement of the European Central Bank’s (ECB) unlimited sovereign bond-buying by the advocate general of the European Court of Justice, last week would provide “comfort” on the options available to them.