IMF demands more from eurozone on Greek debt relief
European finance ministers will gather again then to formally sign off on the payout after failing Monday to agree with lenders on a broader bailout deal for Greece, which has run up the equivalent of an estimated $350 billion in debt.
The vote in parliament, which was met by angry protests, satisfied the conditions of Greece’s bailout and opened the way for debt relief as well as fresh loans so that Athens can repay loans of 7.0 billion euros ($7.8 billion) in July.
“The IMF wants maximum (debt relief) commitment upfront, while others would prefer to be more precise only in 2018″, a senior euro zone official said, referring to the end of the third bailout in mid-2018, by which time lenders would have a full view of Greek reform completion and the latest economic data.
Greece is now in the midst of its third bailout programme – the current three-year deal expires in the summer of 2018 and could be worth up to €86bn in total.
After more than eight hours of talks in Brussels, Greece’s creditors – the eurozone members states and the International Monetary Fund – were unable to bridge their differences on Greece’s ability to repay its debts in the long run. That means only a deal on debt relief between the International Monetary Fund and the euro zone now stands between Athens and new loans.
Greece has sought to calm fears of a summer default as economists warned that uncertainty surrounding the country’s debt pile had put it on course for a fourth bail-out.
Though Greece has emerged from its economic depression in 2014 and its public finances have improved dramatically, the economy is back in recession, having shrunk for two straight quarters.
“The feeling was. more work was needed to be able to have that kind of clarity that the financial markets understood and the Greek people understood (of) what to expect at the end of the programme period in terms of debt relief”, Greek Finance Minister Euclid Tsakalotos said.
The main forms of debt relief envisaged by euro zone governments are maturity extensions for older bailout loans, and deferral of interest payments.
Last Thursday, Greek lawmakers passed new legislation with over four billion euros ($4.48 billion) in new austerity measures.
After the Eurogroup meeting, French finance minister Le Maire said that Germany’s role had been “constructive” but that he “would be lying if [he] said that France and Germany have no difference over the sustainability of Greek debt”.
“We were very close and we were just unable to manage it tonight”, said Jeroen Dijsselbloem, the Dutch finance minister, who chaired the meeting. “We need to close that by looking additional options or by adjusting our expectations”.
“We will try to come to an definite conclusion in the next Eurogroup meeting which will be in 3 weeks time”.
Lender institutions and finance ministers from the 19 Eurozone countries agreed to help Greece pay back almost $8 billion it is required to by July.