Reuters — The International Monetary Fund’s discussions on Greece’s debt are ongoing and no deal has been reached, IMF spokesman William Murray said on Thursday.
“Discussions on the debt side of the equation have only just started, so it’s really early,” Murray told a regular news briefing. “Our position hasn’t changed.”
The IMF backs debt relief and is reluctant to take part in the financing of Greece’s bailout without agreement on a debt burden it views as unsustainable.
Murray added that while the IMF welcomed progress on the economic policy package, it would have to go hand in hand with a credible strategy on debt.
He also said that no deal had been reached on Greece’s primary surplus. The lenders want Greece to maintain a 3.5 percent of GDP primary surplus for up to four years, according to draft documents seen by Reuters.
“We’re still in discussions on that and of course the debt discussions affect the primary surplus over the horizon, so until these things fall into place, I can’t really comment,” he said.
Later on Thursday it was confirmed that euro zone and International Monetary Fund officials will discuss debt relief for Greece early on Friday, on the sidelines of a meeting of G7 finance ministers and central bankers in the Italian city of Bari,
The meeting is to help determine how euro zone lenders, who hold half of Greek public debt, should firm up their conditional promise of debt relief for Greece from last year to satisfy the International Monetary Fund.
Euro zone lenders promised in May 2016 that if Greece delivers on all reforms pledged under its bailout, they would extend the maturities and grace periods on loans so that Greek gross financing needs are below 15 percent of GDP after 2018 for the medium term, and below 20 percent of GDP later.
They also said they could consider replacing more costly IMF loans to Greece with cheaper euro zone credit and transfer the profits made from a portfolio of Greek bonds bought by euro zone national central banks back to Athens.
But all this could happen only if Greece delivers on its reforms by mid-2018 and only if a debt sustainability analysis shows Athens needs the debt relief to make its debt sustainable.
Germany claims that if Greece keeps a high primary surplus for long enough, it may not need any further debt relief.
The final decision on how to phrase the debt relief promise for Greece is to be taken at the next meeting of all euro zone finance ministers on May 22.
When implemented in full, the debt relief measures should lead to a cumulative reduction of Greece’s debt-to-GDP ratio of around 20 percentage points until 2060, according to estimates of the euro zone bailout fund.
