A new Greece programme needs debt restructure: Christine Lagarde

Greece is in a situation of acute crisis which needs to be addressed, she added

International Monetary Fund Managing Director Christine Lagarde has said that a new program to prop up Greece's finances would require creditors to restructure debt.

In addition to the reforms Athens needs to undertake, she said, "The other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability."

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"Greece is in a situation of acute crisis which needs to be addressed," she told a conference in Washington yesterday.

Despite the fact that Greece defaulted on its debt to the IMF on June 30, Lagarde assured that the institution "remains fully engaged in order to help find a solution."

In a report last week the IMF said Greece's official EU creditors should double the payback period for Greece's debts and stump up another 36 billion euros ($40 billion) to ensure the country's finances remain sustainable.

But the European Commission and the European Central Bank are pressing the country hard to accept a package of austere fiscal and policy adjustments that Athens has so far refused to accept.

Lagarde said the numbers themselves "will have to be revisited," but added that Greece, which no longer has access to IMF resources since its default, should not benefit from any special treatment.

"It is certainly my view that the IMF has to follow its rules, should not bend its rules and should be always even-handed."

She justified the Fund's continued participation in new aid talks for Greece even if Athens has been a severe critic of the institution.

"I have heard talk here and there in France saying, 'but what is the IMF doing in this situation? It should be handled by the Europeans,'" she told reporters.

"At the time when I was (France's) finance minister I also supported this viewpoint."

But, she said, the IMF is involved "because the IMF was asked by Greece to be involved."