As anti-bailout party Syriza leads polls ahead of a general election in Greece this coming weekend, the head of the International Monetary Fund warned Monday that the country couldn't renegotiate any debt restructuring deal without accepting "the consequences."
Greece's leftist, anti-austerity party Syriza has widened its lead over Prime Minister Antonis Samaras' New Democracy party according to a poll published Sunday in newspaper To Vima. Syriza has said the level of austerity imposed on Greece as a condition of its billion-euro bailout is unsustainable, and it would renegotiate the deal with the Troika of international organizations making sure the country sticks to the terms -- the European Commission, European Central Bank (ECB) and IMF.
However, restructuring Greek debt would not be without "consequences," the IMF's Managing Director Christine Lagarde warned Monday.
"A debt is a debt and it is a contract," IMF Managing Director Christine Lagarde told The Irish Times in an interview on Monday when asked about the general idea of holding a debt conference. "Defaulting, restructuring, changing the terms has consequences on the signature and the confidence in the signature," she said.
The newspaper added that Lagarde reserved judgement on whether whether Greece's debt pile, at 175 per cent of gross domestic product, is sustainable.
For its part, Syriza has proposed to hold a conference to agree some kind of cancellation of debt -- along the lines of a conference held in London in 1953 at which half of Germany's debt following World War Two was cancelled, enabling the country to recover economically.
Bar a major turnaround in the polls, Syriza's potential election victory is making markets nervous.
On Monday, the Greek stock market was trading down 0.35 percent and the yield on Greek 10-year government bonds had risen to 9.46 percent after following the decision by Fitch ratings agency on Friday to cut the outlook on the country's 'B' credit rating from "stable" to "negative."