The disagreement stems from different projections of what Greece’s debt situation would look like without help. The IMF think debt will be 150 percent of GDP by 2020 without assistance, while the European Commission puts that number at 140 percent. The two factions need to agree on this number in order to formulate an appropriate plan — the plan they put together needs to have matching timelines, because they are required to give out money in tandem.
Talks will begin again on November 20, where the disagreement is sure to rear its head once more. The IMF has provided about a third of Greece’s loans through the crisis so far, but despite the disagreements Lagarde has emphasized that a long-term fix for Greece’s economy won’t be jeopardized by differing strategies.
The decision to extend the level of debt Greece can hold through 2022 means more financing must be made available. Lenders like Germany’s Chancellor Angela Merkel are hesitant to issue more credit ahead of elections in 2013.
The situation in Europe remains a constant concern for investors. The U.S. equity markets are trading lower on Tuesday morning, after closing relatively flat on Monday, as global economic fears are compounded by the fiscal cliff at home.