Lagarde pressures Greek creditors to make better offer

IMF chief Christine Lagarde has ramped up the pressure on Greece’s private creditors to put a better offer on the table as debt swap negotiations continue this week.

Lagarde told Bloomberg Television at the World Economic Forum in Davos today that the debt swap agreement should make a significant contribution to easing Greece's debt levels.

"My understanding is that negotiations are underway. And clearly, up until now, it is not appropriate for the Greeks to accept the creditors' offers. I am pleased to see that they are back to do the drawing board and negotiating and working hard on doing something that is significant and is substantial," she said.

Creditors, led by the Institute of International Finance's Charles Dallara, are pursuing talks with the Greek government on a debt swap to lower Greece's borrowings and avoid default.

The negotiations are taking place three months after bondholders agreed with European officials to take a 50% haircut on the face value of more than €200bn of debt by voluntarily, swapping bonds for new securities. An agreement with bondholders is tied to a second bailout from Greece's European partners.

All eyes on now on 20 March when Greece is due to make a crucial bond payment. A deteriorating economic backdrop in the country has increased speculation EU partners and the IMF will be called upon for further assistance.

Lagarde was adamant the IMF will not have to allocate additional bailout funds to Greece.

"It is very simple from my point of view. The country has to do lots of things - structural adjustment, fiscal consolidation, it has to be stretched over the right period of time. Others may need to contribute according to keys that belong to them, not to the IMF," she told Bloomberg Television. Our objective, and I am riveted to that, is a 120% debt to GDP ratio."

Lagarde also confirmed the IMF is in discussions with emerging market nations to boost the bailout fund.

"More is needed. We are having discussions, not just with the emerging market economies, many economies, many partners, members of the IMF and I am confident those negotiations and discussions, those options we are exploring, will come to fruition in due course."

She also repeated her view that the eurozone crisis is a global problem and other major economies will have to do their part to find a solution.

"It is not just about Europe. Let's face it, bashing a region is not a solution. Other countries in the world have to do things as well. The United States, Japan, they have to anchor in the medium term solid fiscal consolidation pattern. No countries can be in debt forever."