IMF boss Lagarde reacts coolly to latest Greek deficit figures

International Monetary Fund chief Christine Lagarde reacted coolly to data out on the previous day showing that Greece might have managed to beat Brussels target for belt-tightening.

Figures from Greece’s statistical authority had revealed that the country registered a primary surplus, excluding interest payments and bank-rescue costs, worth 0.7% of gross domestic product.

The European Commission and IMF had set Athens a primary deficit target of -0.25% for 2015.

Those numbers “will change perspectives if they are accurate,” Christine Lagarde reportedly said as she arrived at a meeting of Eurozone finance ministers on Friday.

“We’ve seen in the past numbers that have been revised significantly over the course of the usual revisions, so we will scrutinize those numbers very carefully,” she added.

Greece’s total public spending deficit on the other hand was still at 7.2% of GDP last year.

Top economist criticises Eurogroup chief

Reacting to the latest Greek data, Paul de Grawe, a former adviser to the Commission and one of the foremost academic experts on so-called Optimal Currency Areas criticised Eurogroup president Jeroen Dijsselbloem for acting as if “he has the moral high ground”.

Both debtors and creditors have a responsibility, the Dutch economist told Dutch newspaper NRC Handelsblad, adding that the risk of a Grexit from the Eurozone was “as high” as 10 months ago.

That drew an angry retort from EU Commission chief Juan-Claude Juncker who reportedly said those who were restarting the Grexit debate “are playing with fire”.

During the previous weekend, the EU agreed to push Athens for additional reform measures worth up to 4.5% of gross domestic product. Of that amount, two percentage points worth – denominated ‘contingency’ measures - would only be put in motion if the country missed its targets.

According to the Washington-based lender, Greece only managed to hit its targets in 2015 by deferring paying bills and cutting public spending to unsustainable levels.

Revenues from tax collection, one of the country’s most-pressing weak-spots, had in the meantime continued to slide.

Nonetheless, since 2010 Greece had slashed spending and hiked taxes to the tune of 30% of annual GDP.

In exchange for such ‘contingency measures’, which the government in Athens was opposed to, the IMF and the EU would begin to study how to alleviate Greece’s debt burden, possibly as early as next Thursday.