IMF chief encourages Greece to bring reforms to 'fruition'

Greece's populist government must set aside politics and bring promised reforms to "fruition" to save its economy and avoid default, the head of the International Monetary Fund has warned ahead of a crucial few weeks of negotiations.

In an interview with the Financial Times, Christine Lagarde said she told Yanis Varoufakis, the Greek finance minister, during a meeting of the IMF/World Bank spring meetings in Washington last week that he needed to accelerate reforms. She warned that patience was running out with the new Syriza government in Athens and that any honeymoon it may have had with its creditors was rapidly coming to a close.

"There has been a huge commitment by the international community, the European partners but also the IMF and the European Central Bank to actually support the Greek economy," she said.

"What needs to happen now is that the political views need to actually deliver the measures, the tools, the reforms that could actually reach the objectives that have been set between the international community and Greece: restore stability, improve the economy [and] make sure that one of these days Greece re-accesses the financial markets on its own and without support."

Technical negotiations in Athens between the Greek government and staff from the IMF and European institutions were "gradually picking up", she said. "We really hope that is going to continue to fruition so that we can move on."

The intervention from the IMF head came as Mario Draghi, the ECB president, said the eurozone was better equipped than it had been in the past to deal with a new Greek crisis but warned of "uncharted waters" if the situation deteriorates.

Asked during a press conference in Washington on Saturday about the risks of contagion from a new flare-up in Greece, he said: "We have enough instruments at this point in time . . . which although they have been designed for other purposes would certainly be used at a crisis time if needed."

The two tools he referred to were the ECB's so-called outright monetary transactions, which have never been used, and quantitative easing, which the ECB launched in January.

However, Mr Draghi added: "We are certainly entering into uncharted waters if the crisis were to precipitate, and it is very premature to make any speculation about it."

Renewed fears about the risk of a Greek debt default and possible exit from the euro overshadowed last week's IMF meetings in Washington.

US Treasury secretary Jack Lew warned that a full-blown crisis in Greece would cast a new shadow of uncertainty over the European and global economies, as he put pressure on Athens to come forward urgently with detailed reforms to its economy.

There is mounting frustration among Greece's partners over faltering attempts to sort out its financial woes. Pierre Moscovici, the European commissioner for economic and financial affairs, has set a mid-May meeting of eurozone finance ministers as the decisive moment for Greece to agree a new set of economic reforms or face possible default.

Greece is being urged to speed up technical discussions on a list of reforms it has submitted that, if agreed, would unlock €7.2bn in loans from Greece's eurozone partners. Without this funding Greece is likely to run out of money and default on payments due to either the IMF in May or June, or to the ECB later in the summer when large numbers of bonds held by the bank mature.

Expressing confidence in the euro's continued stability, Mr Draghi said on Saturday it was "pointless" to go short on the single currency - challenging anyone who disagreed to do it.

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