Greek Debt Crisis: IMF Chief Calls For Restructuring Debt As German Parliament Debates Bailout

Christine Lagarde, director of the International Monetary Fund (IMF), reiterated the institution’s earlier stance that Greece’s bailout deal would not be viable without a “complete package” that would make the country’s borrowings sustainable. The IMF had, in a statement released earlier this week, called for more relief for Greece to reduce its “highly unsustainable” debt.

“This complete package has two legs, a Greek leg that entails an in-depth reform of the Greek economy. That means holding a budgetary position that is sound and gives the country solidity; and the second leg is that of the lenders, which entails supplying financing and restructuring the debt to ease its burden,” Lagarde reportedly said early on Friday, according to media reports.

The IMF has already made it clear that it will not send any new program to its board that does not include debt restructuring.

On Thursday, Mario Draghi, chief of the European Central bank -- which raised emergency lending to Greek banks -- also called for debt relief for Greece.

“Debt relief is necessary, it's uncontroversial,” Draghi reportedly said, during a press conference on Thursday. “The issue is what's the best form of debt relief.”

A form of debt relief that the IMF suggested earlier -- and that Lagarde argued in favor of on Friday -- involves a significant extension of loan maturities, in some instances, by up to 30 years. Greece’s other creditors, however, have so far refused to consider a debt write-off or stretching repayment schedules.

Also on Friday, the German parliament began a debate ahead of a key vote on the bailout deal. The measure is expected to pass with a clear majority, according to media reports.

“The alternative to this agreement would not be a ‘time-out’ from the euro ... but rather predictable chaos,” German Chancellor Angela Merkel said, during her speech in parliament on Friday, referring to the tentative plan that was discussed during the protracted negotiations between Greece and its creditors in Brussels early Monday.

Later today, the Austrian parliament is also expected to debate and vote on the bailout agreement. France and Finland have already approved the deal.