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IMF presses for resolution of Greek debt crisis

International Monetary Fund Managing Director Christine Lagarde delivers a speech Monday in Berlin.

Jens Meyer/Jens Meyer/Associated Press

It's a measure of the languid pace of reform in Europe that two years into the crisis the Greek problem remains unresolved.

International Monetary Fund Managing Director Christine Lagarde stated the obvious Monday, warning that Greece "cannot be on a life-support system forever."

Don't expect a resolution at today's meeting of European Union Finance ministers, analysts say. That may have to wait until the Jan. 30 EU leaders summit.

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Greece is in talks with private creditors on restructuring of roughly €100-billion of its €350-billion debt. Euro zone finance ministers were originally supposed to discuss a new bailout for Greece in Brussels on Monday, but it's contingent on a debt restructuring deal involving private creditors, including many of the largest banks in Europe.

Over the weekend, creditors left Athens without agreeing on a debt restructuring deal. They reportedly won't accept losing any more than 65 to 70 per cent on the value of the Greek government bonds they hold.

Even that severe buzz cut may not be enough to tackle the country's rising debt, warned analyst Michael Hewson of CMC Markets in London.

"Let's not forget that we started out at a 21 per cent haircut at last July's EU summit and the number has kept going up, at the same rate that Greece's economy has been spiralling down," Mr. Hewson remarked in a note to clients.

Canadian officials are also frustrated at the continued slow progress towards resolving Europe's debt woes.

"We've seen a series of meetings and we still haven't seen the outcome that will reverse this and ensure that the troubles in Europe don't spill out any more than they already have into the wider global economy," Andrew MacDougall, Prime Minister Stephen Harper's spokesman, told reporters in advance this week's trip to the World Economic Forum in Davos, Switzerland.

"Because that certainly, as we've seen, impacts Canada and our prospects here at home."

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With files from Campbell Clark in Ottawa

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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