World Economy

IMF Rules Out Special Treatment for Greece

IMF Rules Out Special Treatment for GreeceIMF Rules Out Special Treatment for Greece

Greece must respect the eurozone’s rules and cannot demand special treatment for its debt in the wake of the victory of anti-austerity party Syriza, International Monetary Fund chief Christine Lagarde said on Monday, Reuters reported.

“There are internal eurozone rules to be respected,” Lagarde told Le Monde daily. “We cannot make special categories for such or such country.”

Lagarde added that Greece still needed to carry out key reforms, such as tax collection and reducing judicial backlogs. “It’s not a question of austerity measures, these are in-depth reforms that remain to be done,” she said.

  European Markets Fall

European shares fell and borrowing costs for the eurozone’s most indebted states rose on Monday as Syriza party looked set to take on Greece’s international lenders after a crushing victory in early elections.

Syriza leader Alexis Tsipras promised Greeks on Sunday that the five years of austerity imposed under bailout programs worth 240 billion euros ($270b) from the European Union and the International Monetary Fund were over.

The euro stabilized, but held close to an 11-year low against the dollar hit in Asian trade. The Greek election result is a second blow to the single currency after the European Central Bank launched a money-printing program last week. But the ECB’s quantitative easing scheme, which surprised many investors with its size and scope, helped ease fears of fresh instability in Europe. Expectations that a compromise can be reached between Athens and its lenders, keeping Greece in the euro, also supported investor sentiment.

“The QE announced last week has gone some way to prop up the markets but the implications of a ‘Grexit’ will continue to linger,” said Tom Robertson, senior trader at Accendo Markets.

The FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,475.49 points, mirroring a similar fall in Asian markets.

Yields on lower-rated euro zone bonds bounced off record lows, with Italian 10-year yields up 1 basis point at 1.53 percent and Spanish and Portuguese yields 2 bps higher at 1.39 percent and 2.26 percent, respectively. Greek markets suffered more. Ten-year yields rose 22 basis points to 8.99 percent, while Greece’s main stock index fell 0.5 percent, with shares in banks such as Alpha Bank and Piraeus Bank hit even more.

Renegotiating the deal could lead to a stand-off between Athens and other eurozone leaders and raise fears of “Grexit”, although the consequences of such a move for Europe are likely to push policymakers to find an agreement.