In high-stakes deals on the Street, the side with the leverage usually demands “show me the money first, then we’ll talk.” But in the rarefied and much higher-stakes world of desperate sovereign borrowers and multilateral lenders of last resort like the International Monetary Fund, it’s the other way around – “show me the goods first, then you get the money.” In the case of Greece, Christine Lagarde says “implementation must happen, more than lip-service.”
In a wide-ranging, extended interview the IMF Managing Director told CNBC the new coalition government in Greece is saying the right things. “I’m quite pleased to see that the Greek authorities are aware of the fact that they have to demonstrate their determination to own, adopt and implement the program. Because I think that’s a quid pro quo that was not necessarily in place previously. That change of attitude I think was warranted, is welcome, and will help have a better dialogue with the authorities.”
Here’s the “but”, though. Asked directly if she’s willing to give the new Greek coalition government more time to implement the reforms and austerity measures required to receive more emergency money, Lagarde said it’s “way premature to discuss extension, to discuss additional financing.”
She said the sequence should be: “first of all it’s a new mindset, a proper fact-finding exercise, and then a discussion with the authorities to see how with their new policies, their new strategy, the situation can be accomodated.”
(source: CNBC)
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