Date: Thursday 17 May 2012
International Monetary Fund (IMF) Managing Director Christine Lagarde insists that Greece needs to continue to comply with the agreements it made to receive the bailout package, while warning that its exit could be an extremely costly process that the IMF needs to be prepared to face.
In an interview with Dutch television Lagarde said she felt that most Greeks wanted to remain in the Eurozone but for the Hellenic Republic to do so, it must “abide by the program which has been put in place and where the euro partners actually agreed to support the country.”
She also repeated that the possibility of a Greek exit is something the IMF has to be “technically prepared for because it’s our job.” Yet she made clear that “I’m not saying this is the desired solution but that this is simply within the range of multiple options, one that we are required to technically examine”.
Lagarde also expressed her worries about the cost of an exit. “With the currency union of the Eurozone, what happens to any member is going to affect others,” she said, adding that a Greek exit from the euro would be “extremely expensive”.
Although Lagarde didn’t specify on exact costs, the Centre for Economics and Business Research (CEBR) calculates the price tag to be no less than one trillion dollars. These experts expect the Eurozone to break up within the next five years, or in their words “not this week but probably by 2013.”
“Sooner or later both the Greek population and international creditors will tire of fighting a loosing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries,” CEBR's Chief Executive Douglas McWilliams added. “A series of bailout packages and eventual debt restructuring will delay this moment, but it will come,” he concluded.
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