Bundesbank: High surpluses are a debt forgiveness measure

EPA/PATRICK SEEGER via Naftemporiki
Naftemporiki — Germany’s Bundesbank directly entered the “Greek debt” fray this week, amid still unresolved differences between European creditors and the IMF over the issue, pointing out that Greece continues to exceed memorandum-mandated primary surplus budget targets.

In echoing the German government’s standing position that debt relief measures in the current phase are not necessary for thrice bailed out Greece, the Bundesbank said high fiscal targets – i.e. surpluses of 3.1 percent of GDP – are, in fact, an additional debt forgiveness measure.

A relevant report by German’s powerful central bank said Greece remains in an ESM program until August 2018, while evaluations of Athens’ fiscal performance must be judged based on the targets of the bailout program, and not just European fiscal regulations.

Meanwhile, the IMF continues to argue that further debt relief is needed for  Greece for it to participate in the Greek programme,  something that looks to be entirely redundant in the last three months of the programme. The IMF has not contributed financially to the Greek bailout since 2014 and the country does not need any more loans at this stage,  as it continues to achieve larger than expected surpluses.

The IMF, however, appears determined to remain involved in the post programme monitoring to assist further with ‘structural reforms’ and ‘growth-friendly policies’