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Europe should go extra mile for Ireland, Portugal -IMF's Lagarde
March 7, 2013 / 9:59 AM / 5 years ago

Europe should go extra mile for Ireland, Portugal -IMF's Lagarde

DUBLIN, March 7 (Reuters) - Europe should do all it can to assist Portugal and Ireland’s return to financial markets, not limiting its help to just extending loans under their EU/IMF bailouts, International Monetary Fund chief Christine Lagarde said.

“I would be cautious not to limit it to an extension,” she said in an interview with the Irish Times newspaper on Thursday, a day ahead of an official visit to the country - her first mission to a bailed-out euro zone state.

She also said policymakers should guard against complacency after the global economy came close to collapse last year, given the risk of a relapse.

Ireland and Portugal, which have both stuck closely to the economically painful terms set out by their international lenders, have in return asked for the bailout loans to be extended.

European Union finance ministers sought advice on Tuesday on how to help the countries demonstrate the success of their bailout programmes by returning to international debt markets.

Referring to those deliberations, Lagarde added: “I think it has really been refined yesterday during the discussions as an adjustment that might include very much an extension of the maturities but is not limited only to the extension of maturities.”

Referring to Ireland, she said “any avenue” should be explored that supported the country’s return to economic growth and self-sufficiency.

Lagarde arrives in Ireland on Friday to meet with authorities aiming for a successful exit from the bailout programme at the end of the year.

The newspaper quoted her as saying that there was not much more that could be done on interest rates but that “financial people can think of lots of things”. Pushing out Ireland’s bailout repayments to the end of the term was one option.

The IMF has been pushing Europe for over a year to provide further help to Ireland and has urged that euro zone rescue funds be allowed to retrospectively recapitalise Irish banks, saying failure to do so could revive market doubts about Irish debt sustainability.

Lagarde also said caution was needed to prevent a “relapse” into a global financial meltdown following last year’s close call.

The euro zone economy woes have stabilised in recent months since last year’s Greek crisis but an inconclusive election in Italy last week signalled another pothole in the stuttering global post-crisis recovery.

“Clearly the world economy avoided collapse last year and I am very concerned that, by moving into a semi-complacent mood, people risk a relapse,” said Lagarde.

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