Reuters – The euro zone and International Monetary Fund are discussing options for future debt relief for Greece at meetings this week in Washington, but are not considering any extensions of the Greek bailout, top euro zone officials said Thursday.
“There are no talks of such things as an extension of the Greek program. The Greek authorities are very much focused on the exit from the program and finalizing this by August,” said Mario Centeno, the chairman of euro zone finance ministers.
Centeno was responding to media speculation that Greece could get a special credit line from the euro zone bailout fund after it exits the program on Aug. 20 to be less dependent on market sentiment, but which would also come with conditions.
Greece does not want such a credit line because of the conditions. Throwing off the formal control of the euro zone would be perceived as a key political achievement for the government of Prime Minister Alexis Tsipras.
Neither Ireland, nor Portugal, Spain or Cyprus, which all received euro zone bailouts in the past, decided to ask for such a precautionary credit line, opting for what is called in EU jargon a “clean exit.”
As it is the case with other EU countries exiting bailout agreements “We will need to agree a post-program arrangement that supports the continued implementation in the coming years of the adopted reforms, as well as the pursuit of sound fiscal policies – but which is not a new program in disguise,” Moscovici said in a speech at the Peterson Institute of International Affairs in Washington.
After Greece exits its bailout it will regain full sovereignty in fiscal policy-making, submitting only to less detailed creditor scrutiny in what is called post-program surveillance. It is now subject to quarterly reviews that it has to pass to get new loans.
To make sure Greece does not veer off the reform track in the years to come, its creditors are considering linking additional debt relief ‘to sound economic policies’ and to the pace of the country’s economic growth.
The various debt relief options under discussion include the transfer of profits from maturing Greek bonds held by national central banks back to Athens, or replacing more costly IMF loans with cheaper euro zone loans.
There are also options of extending maturities of euro zone loans and grace periods for repayment. Such relief could be made conditional on ‘sound’ economic policies and keep the country under some form of euro zone economic control for years to come.
Officials said that while discussions on various options for Greek debt relief would continue in Washington this week to establish the “red lines” for Germany and for the IMF, no conclusions are likely until in June.