In high-stakes deals on the Street, the side with the leverage usually demands "show me the money first, then we'll talk." But in the rarefied and much higher-stakes world of desperate sovereign borrowers and multilateral lenders of last resort like the International Monetary Fund, it's the other way around — "show me the goods first, then you get the money." In the case of Greece, Christine Lagarde says "implementation must happen, more than lip-service."
In a wide-ranging, extended interview the IMF Managing Director told CNBC the new coalition government in Greece is saying the right things. "I'm quite pleased to see that the Greek authorities are aware of the fact that they have to demonstrate their determination to own, adopt and implement the program. Because I think that's a quid pro quo that was not necessarily in place previously. That change of attitude I think was warranted, is welcome, and will help have a better dialogue with the authorities."
Here's the "but", though. Asked directly if she's willing to give the new Greek coalition government more time to implement the reforms and austerity measures required to receive more emergency money, Lagarde said it's "way premature to discuss extension, to discuss additional financing."
She said the sequence should be: "first of all it's a new mindset, a proper fact-finding exercise, and then a discussion with the authorities to see how with their new policies, their new strategy, the situation can be accomodated."
Earlier this week, Greece's coalition agreed on reforms. But Greek Finance Minister Yannis Stournaras told CNBC the government would be asking the Troika, which includes the IMF, for more time to meet reform and austerity targets.
Despite maintaining her hard line on Greece as a sovereign — recall those controversial comments in an interview with Britain's Guardian newspaper a few months ago, about the need for Greeks to get their act together and pay their taxes, when millions can barely feed themselves in Africa — Lagarde empathised with the Greeks as a people.
"I think we need to recognise that the Greek population has suffered a lot, and have made sacrifices of significant nature and amount." She said considering the drop in Greek GDP and living standards, people there "have made huge efforts which often go under-estimated."
And as for criticism that the IMF is practising double standards, going easy on European peripheral countries in distress now, compared to the harsh conditions imposed on Indonesia and others during the Asian financial crisis 15 years ago, Lagarde had this to say: "The Fund taking things easy and casually with Greece is certainly not what the Greek people think, I've been on the receiving end of that. We have to be even-handed, this is the mission of the Fund. We're not here to cater for a particular region with special care, and others, not."