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Greece could exit eurozone – IMF chief

Published time: May 16, 2012 01:50
Edited time: May 16, 2012 05:50
IMF Managing Director Christine Lagarde (Reuters / Yuri Gripas)

IMF Managing Director Christine Lagarde (Reuters / Yuri Gripas)

Even an ‘orderly’ exit by Greece from the eurozone poses great risks, but exiting remains an option if the debt-laden nation fails to meet the terms of the bailout deal reached with its partners, says IMF chief Christine Lagarde.

­“If the country’s budgetary commitments are not honored, there needs to be appropriate revisions, which means either supplementary financing and additional time, or mechanisms for an exit, which in this case must be orderly,” the head of the International Monetary Fund told France 24 on Tuesday.

Lagarde has acknowledged that any scenario that would lead Greece out of Europe’s single currency would be “extremely expensive and would pose great risks.” Nevertheless, she said, all these options must be considered.

Lagarde pledged that the IMF remains open to any “compromise solution” concerning Greece’s commitments, but the “fundamentals” of the bailout deal are not to be altered.

Lagarde’s interview followed another day of desperate attempts in Greece to form a coalition government after inconclusive parliamentary elections on May 6. On Tuesday, a spokesman for President Karolos Papoulias admitted that all attempts to produce a viable coalition government have failed.

The IMF chief criticized Greek politicians, accusing them of holding their people hostage to political disagreements.

“They have undertaken important reforms, they have made a certain number of sacrifices,” Christine Lagarde said. “To throw all this away because of profound political disagreements, it’s really a shame for the Greek people.”

As she spoke, financial markets tumbled amid fears that Greece’s possible exit from the eurozone could trigger a chain reaction among more significant, yet troubled, economies, namely Spain and Italy.