Greece apparently still caught in IMF – Berlin disagreement over debt relief

Naftemporiki — The German financial daily Handelsblatt on Monday offered up a pessimistic view of the current economic situation in Greece, saying the country will need a fourth bailout program.

Under a headline of “Greece a prisoner of the crisis”, the Düsseldorf-based daily said Friday’s agreement at the Eurogroup meeting was not a success but rather “another simple step along a difficult road.”

“It’s practically impossible for the country to exit the crisis soon. With the return of the institutions to Athens, the road is open, at least, for a conclusion of the second review and the disbursement of the next (loan) tranche. However, there is no reason for Greece or creditors to breathe a sigh of relief. The situation remains difficult; the country is still far off from its rescue.”

But German finance minister Wolfgang Schaeuble ruled out the possibility of further financial assistance to Greece either in the form of a new bailout or debt relief, in a statement to Deutsche Welle TV on Tuesday . The aim of the current programme, he said, is Greece to tap the markets and meet its financing needs.

On the Eurogroup agreement, he said that there is an in principle agreement on the political issues but on the technical issues there is still work to be done among the institutions.

“I hope that the institutions will soon find a solution. This is for the best of Greece and Europe. And I hope that political discussions will not open again,” he underlined.
Moreover, he said that the programme can only continue with the participation of the IMF otherwise it would be required the approval of the national parliaments.

So far, the IMF has refused to join the Greek bailout for two reasons. First, it did not share the policies supported by the European Union. A second reason is the fund’s demand for debt relief for Greece.

According to the Eurogroup however, the IMF now supports the policies agreed to with Greece, so debt relief is the major obstacle for the fund’s participation in the bailout. Though Germany may promise to discuss the issue in 2018, no real measures from Berlin should be expected at least until Germany’s general election in September.

German Chancellor Angela Merkel met with Christine Lagarde, the managing director of the International Monetary Fund (IMF), in Berlin on April 10 to discuss debt relief for Greece and the IMF’s participation in the Greek bailout.

No announcement has been made yet. The previous meeting between Merkel and Lagarde to discuss debt relief on 21 February resulted in the IMF’s position moving closer to that of Berlin.

Lagarde said at the time that Greece’s debt needed “significant” restructuring but that it did not require debt forgiveness”.

Lagarde had also signalled that Greek debt restructuring can wait and the country should focus on overhauling its economy for the duration of its latest bailout, which expires in 2018.