IMF chief: Greece could leave euro
GREECE could leave the euro, the head of the International Monetary Fund admitted yesterday.
But the single currency would ‘probably’ survive a Greek exit, said Christine Lagarde.
Her surprisingly unguarded remarks are the starkest warning yet that Athens will be forced to abandon the euro if it cannot meet its debts.
Greece must repay £1.1billion to lenders by the end of next month or risk bankruptcy. The deadline had been June 5, but was pushed back again yesterday with the two sides locked in talks.
It has to make the repayments in order to unlock £5billion of bailout money, which it needs to keep paying public wages.
But the lenders have been growing increasingly frustrated at the unwillingness of the far-Left Syriza government to impose spending cuts and trim public sector pensions.
Speaking during a crisis meeting of G7 finance leaders yesterday, Mrs Lagarde said the IMF was not prepared to pay out more funds without a clear reform pledge. And she added that it is ‘very unlikely that we will reach a comprehensive solution in the next few days’.
Without further money, Greece has said it will default on its debts – a move that many believe will force it to leave the single currency. Mrs Lagarde said: ‘A Greek exit is a possibility.’ But she added that an exit would ‘probably not be an end to the euro’.
The European Central Bank yesterday warned that the risk of Greece defaulting on its debts had ‘increased sharply’ in recent days. Greek interior minister Nikos Voutsis has warned that Athens does not have enough money to make the repayments.
Analyst David Buik yesterday accused Mrs Lagarde of ‘sabrerattling’ and said ‘hell has a better chance of freezing over than Greece has of maintaining its financial status’. ‘To let them go shows that the European dream is over,’ he said.
Chancellor George Osborne has warned that a Greek exit would have ‘very serious consequences’ for Britain’s economy.