Greece needs two more years to fix economy: Lagarde

Greece’s badly stressed economy will need a further two years before it is righted, the International Monetary Fund’s managing director said on Thursday in Tokyo.

Christine Lagarde told a news conference it would take time before Athens is able to reduce its deficit to agreed levels.

“Instead of frontloading heavily it is sometimes better, given the circumstances and the fact that many countries at the same time go through that same set of policies with the view of reducing their deficits, it is sometimes better to have a bit more time,” Lagarde said.

“This is what we’ve advocated for Portugal, this is what we’ve advocated for Spain and this is what we are advocating for Greece. I have said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation program.”

Greece is going through a painful round of austerity and spending cuts imposed on the country in return for promised loans and debt relief worth about 347 billion euros (US$448 billion).

The belt-tightening has forced Greece into its fifth year of recession, with contraction of 3.8 per cent forecast for 2013.

About one in five people are unemployed in the country, and many of those who still have jobs saw their pay slashed.