The International Monetary Fund and eurozone government lenders need more time to reach an agreement on debt relief for Greece because the euro zone is still not sufficiently clear in its intentions, IMF chief Christine Lagarde said today.

Top eurozone officials and Lagarde met on the sidelines of a G7 finance ministers meeting in the Italian port city of Bari to discuss debt relief which the Eurogroup of eurozone finance ministers promised in May 2016, under strict conditions.

 "We will carry on working on this debt relief package. There is not enough clarity yet. Our European partners need to be more specific in terms of debt relief which is an imperative," Lagarde told reporters on entering the G7 talks.

 The IMF belives that debt relief, or at least a clear promise of it now, is needed to restore investor confidence in Greece, especially if the country, which has public debt of 180 per cent of GDP, is to return to market financing next year.

 Officials said both the eurozone and the IMF were determined to reach a deal by May 22 and were constructive in their discussions, going beyond a mere restating of positions, even though a lot more work had to be done to reach a deal.

 Eurozone lenders promised in May 2016 that if Greece delivers on all reforms pledged under its bailout, they would extend the maturities and grace periods on loans so that Greek gross financing needs are below 15 percent of GDP after 2018 for the medium term, and below 20 percent of GDP later.

 They also said they could consider replacing more costly IMF loans to Greece with cheaper eurozone credit and transfer the profits made from a portfolio of Greek bonds bought by euro zone national central banks back to Athens.

 But all this could happen only if Greece delivers on its reforms by mid-2018 and only if a debt sustainability analysis shows Athens needs the debt relief to make its debt sustainable. (Reuters)

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