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The IMF is losing patience with Greece

26 May 2012

11:30 AM

26 May 2012

11:30 AM

Much ado about Christine Lagarde’s interview with the Guardian this morning — and understandably so. After all, the head of the IMF is normally so
restrained and delicate, yet here she lets that drop. When it comes to Greece, she says, ‘I think more of the little kids from a school in a little village in Niger who get teaching two hours
a day, sharing one chair for three of them, and who are very keen to get an education… I think they need even more help than the people in Athens.’ And she also stresses that the Greek
people should ‘help themselves collectively… By all paying their tax.’ Common sense? Sure. But in the annals of euro-rhetoric this is a particularly blunt example of it.

Putting the tone of what Lagarde’s saying aside, though, the content of it isn’t too surprising. She’s urged Greece to stick with austerity before now. And the IMF has slowly adopted a less forgiving attitude towards the
country throughout this year, including by loaning it relatively ‘minimal’ amounts of cash, and then pushing the responsibility
for future bailouts onto Eurozone countries. Today’s interview is just
the new high-water mark of a tide that has been rising for months.

So what now? That, I’d say, is largely up to the Greek politicians and their electorate. As the FT’s Peter Spiegel explained in a very useful blog-post back in March, the IMF was already losing faith in Greece’s ability to
meet the demands of its austerity programme — and Lagarde’s latest intervention suggests that that process is continuing apace. And if the IMF finally does withdraw its support, then it
would be another ingredient in the cocktail of circumstances that could force Greece out
of the euro.


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