(In para 3, Eurogroup presser was this week, not last week)
By Lesley Wroughton
MANILA Nov 15 The head of the International
Monetary Fund, Christine Lagarde, will cut short a visit to Asia
to attend a crucial Eurogroup meeting in Brussels next week amid
divisions with European leaders over how Greece can reduce its
"The managing director will participate in the eurogroup
meeting on Nov. 20 as she usually does and that will mean
shortening her current trip to Asia," IMF spokesman Gerry Rice
said on Thursday.
Disagreement over how to shrink Greece's debt unexpectedly
flared into the open this week during a news conference in
Brussels when Jean-Claude Juncker, who chairs the eurogroup of
finance ministers, said Greece should be given until 2022 to
lower its debt-to-GDP ratio to 120 percent.
Lagarde, sitting next to Juncker at the time, disagreed and
insisted that Greece should meet the target of 120 percent of
GDP by 2020 previously agreed in its bailout so that its debt is
put on a sustainable path.
Lagarde, who is currently in the Philippines as part of a
visit to Southeast Asia, had been scheduled to attend a meeting
of ASEAN nations in Cambodia early next week.
Instead, she will return to Brussels for a meeting of the
17-nation Eurogroup, which will try to flesh out a deal ahead of
a European leaders' meeting later next week.
In remarks in Malaysia on Wednesday, Lagarde insisted that
Greece needs a lasting solutions to its debt burden to avoid a
prolonged crisis and possibly more bailouts.
The IMF wants euro zone governments to write off some of
Greece's debt to make it more manageable. Another solution could
be if euro zone governments lower interest rates on outstanding
Greek debt or extends maturities on loans.
With Greece's overall debt pile set to hit 190 percent of
GDP next year, the IMF has set 120 percent as the target, saying
that anything much above that is not sustainable given weak
growth prospects and high external borrowing requirements.
Resolving Greece's problems will probably require a
writedown of at least part of its debt, and Spain also urgently
needs to seek a bailout, European Central Bank Governing Council
member Luc Coene was quoted as saying.
Coene made the comments at a debate at the University of
Ghent, Belgian daily De Standaard reported on Thursday.
On Greece, Coene appeared to share the position of IMF that
some Greek debt must be written down.
Germany, the biggest contributor to euro zone bailout funds,
has repeatedly rejected the idea of euro zone governments
writing down their holdings of Greek debt, saying it would be
Banks, insurers and other private sector investors holding
about 206 billion euros of Greek bonds took a 53.5 percent
reduction on the nominal value of their securities earlier this
(Editing by Kim Coghill)