Lagarde said the current bailout plan put responsibility for huge fiscal and social reforms on the Athens government at the same time as demanding enormous debt repayments, which the IMF has said are not sustainable.
"A complete program stands on two legs," said Lagarde.
"The first leg is a Greek leg: deeply reform the economy and hold a healthy fiscal line. The second leg is the creditors' leg: provide financing and restructure the debt to lighten the burden."
Even the IMF thinks the Greek deal makes no sense http://t.co/32hgs26LS5 pic.twitter.com/UVhoNcklJ0
— The Economist (@TheEconomist) July 16, 2015
"That is why European countries admitted the principle of debt relief" in the euro summit statement, signed on Monday, Lagarde added.
However, she said the negotiations between the IMF, the Eurozone group, the European Central Bank and Greece over the current bailout structure would not be easy. Bailout negotiations, she said "will be laborious."
She welcomed the deal, now she said it won't work. But she is right http://t.co/4G8gKDXSz1 #GreeceCrisis #grexit #Greece #Lagarde
— Jimmy Tong (@StuckInForex) July 17, 2015
Speaking to radio station Europe 1 Lagarde said:
"We are not at the end of a process yet. A process is opening, with a very tight agenda and a huge challenge. It will not be a road paved with roses."
German FM Warns of IMF Delay
Meanwhile, German Finance Minister Wolfgang Schäuble said in a letter to the president of Germany's lower house of parliament that the International Monetary Fund would not be involved in the payment of a first tranche of a planned third Greek bailout.
That tranche is due to be paid in mid-August, according to the letter, seen by Reuters, in which Schäuble requested that the parliament agree to open talks on a third Greek bailout.
The letter said the IMF would make its further involvement dependent on a successful conclusion of the first program review in autumn 2015 and a confirmation of Greece's debt sustainability.
However, Peter Altmaier, chief of staff of Chancellor Angela Merkel, said on a German television talk show late Thursday that Lagarde had "made [it] very clear that the IMF will not withdraw" from bailing out Greece.
One of the IMF's former European chiefs says Germany, not Greece, should leave the euro http://t.co/pEagsXeVaC pic.twitter.com/7L6CiIh0WC
— Greece Update (@GreeceUpdate) July 17, 2015
Speaking on the show on ZDF, Altmaier said Berlin had "quite clearly said that the IMF must remain on board, that the IMF must be involved."
Merkel fights for Greece and wins in Bundestag #Merkel #Lagarde #Referendum #Tsipras http://t.co/hDfCXekR9V pic.twitter.com/l6J01IcI2C
— Millennial Monitor (@kylemillennial) July 17, 2015
Earlier on Thursday, Eurozone group President Jeroen Dijsselbloem, who is also Dutch finance minister, told an emergency session of the Dutch parliament there was broad agreement that the IMF needed to be involved in future Greek bailouts.
