Lagarde pursues ‘good faith’ Greek talks after leaks dispute

Bloomberg

International Monetary Fund Managing Director Christine Lagarde said she intends to negotiate “in good faith” with the Greek government, signaling that recent animosity over the latest review of the country’s aid program will blow over.
“We continue to be focused on addressing the Greek situation,” Lagarde said in an interview in Frankfurt on Tuesday with Bloomberg Television’s Francine Lacqua. Negotiations are focused on restoring Greece’s financial stability to deliver debt sustainability, and to equip the economy with the structural reforms needed for the country to stand on its own two feet, she said.
Lagarde indicated that some flexibility may be available to Prime Minister Alexis Tsipras’s government on the condition that euro-area member states provide more debt relief to Greece. “If the primary surplus is a bit lower,” then the debt operation needs to be stronger or longer term, “but it needs to add up,” she said. The Washington-based fund isn’t willing to “cut a deal on the side,” bending its own rules on debt sustainability and structural reforms, she added.
Greek bailout monitors are in Athens this week, negotiating with the government over a series of measures required for the disbursement of the next tranche of emergency loans to Europe’s most indebted state.
Klaus Regling, who heads the euro area’s crisis fund, told reporters in Luxembourg on Tuesday that he aims to complete the Greek review in early May. “We very much hope that the IMF will also be on board by then,” he said.
Lagarde spoke after strongly worded letters were exchanged in the aftermath of the publication by Wikileaks of what it alleged was a transcript of an IMF conference call on Greece. In the Bloomberg interview, she suggested that she’s willing to let the heat stemming from the weekend exchange will dissipate.
“We’ve gone through ups and downs,” she said of the talks with Greek officials. “We are there for the people.”
Greece’s government said the leaked transcript showed the IMF has been considering a plan to cause a credit event in Greece and destabilize Europe, an accusation Lagarde said was “simply nonsense.” In a letter to Tsipras on Sunday, Lagarde said the two sides are “a good distance away” from an agreement that could be presented to her organization’s board for approval.
Tsipras’s allegations “were an attempt to solidify party support in the face of a convenient enemy for political gains,” said George Pagoulatos, a professor at the Athens University of Economics and Business. The premier’s exchanges with Lagarde over the weekend “were also forward looking, in the sense of preemptively scapegoating the IMF for a potential deadlock in the program review talks,” Pagoulatos said in an
interview.
Greek stocks rose 0.6 percent at 1:34 p.m. local time in Athens on Tuesday. Yields on 10 year bonds rose 14 basis points to 9.02 percent. Greek notes are the worst performing of all major sovereign securities tracked by Bloomberg’s World Bond Indexes this year.