MANILA: Christine Lagarde, the International Monetary Fund (IMF) head, will cut short a visit to Asia to attend a crucial Eurogroup meeting in Brussels next week amid divisions with European leaders over how Greece can reduce its debts.

“The managing director will participate in the Eurogroup meeting on Nov 20 as she usually does and that will mean shortening her current trip to Asia,” IMF spokesman Gerry Rice said yesterday.

Disagreement over how to shrink Greece’s debt unexpectedly flared into the open this week in Brussels when Jean-Claude Juncker, who chairs the eurogroup of finance ministers, said Greece should be given until 2022 to lower its debt-to-GDP ratio to 120%.

Lagarde, sitting next to Juncker at the time, disagreed and insisted that Greece should meet the target of 120% of GDP by 2020 previously agreed in its bailout so that its debt is put on a sustainable path.

Lagarde, who is currently in the Philippines as part of a visit to Southeast Asia, had been scheduled to attend a meeting of Asean nations in Cambodia early next week.

Instead, she will return to Brussels for a Nov 20 meeting of the 17-nation Eurogroup, which will try to flesh out a deal ahead of a European leaders’ meeting later next week.

In remarks in Malaysia on Wednesday, Lagarde insisted that Greece needs a lasting solution to its debt burden to avoid a prolonged crisis and possibly more bailouts.

The IMF wants eurozone governments to write off some of Greece’s debt to make it more manageable. Another solution could be if eurozone governments lower interest rates on outstanding Greek debt or extend maturities on loans. — Reuters

This article first appeared in The Edge Financial Daily, on Nov 16, 2012.