Reuters — The lender’s technical teams will return to Greece to finalize the details of the delayed programme review next week European Economics Commissioner Pierre Moscovici said.
Greece and its lenders agreed on April 7 in Malta on additional austerity to convince the IMF to participate in the third Greek bailout programme.
In the last two weeks the lenders put the finishing touches to the Malta agreement at talks in Washington, on the sidelines of the annual meetings of the International Monetary Fund.
“It is a matter of technical arrangements, we are preparing the conditions, it was always foreseen that it would happen after the IMF meetings, the day after the IMF meetings they will be able to go back to Athens, because they have the political mandate which is very clear,” Moscovici told Reuters.
“I am confident that the last technical details will be solved during those meetings here so that the mission can go back to Athens just after these meetings,” he said.
Greece is on its third bailout from euro zone governments since 2010. To get more cheap loans, it has to pass regular reviews of measures taken by experts sent by the lenders.
The latest review has dragged on since the middle of last year because of differences between Germany and the IMF over the extend of pension cuts and income tax increases that the lenders believe Greece must undertake after the end of the current programme to put its finances on a sustainable footing.
Greece accepted in Malta that it would take steps to produce savings in its pensions system of one percent of GDP annually starting in 2019, an election year.
Another one percent annually is to come from reform of the income tax system in 2020.
The additional reforms are mainly to satisfy the International Monetary Fund and Germany, which have been sceptical that Greece would be able to reach previously agreed fiscal targets without them.
The Greek target is a budget surplus before debt servicing of 3.5 percent of GDP in 2018. It is then to be maintained at that level over the “medium term”. There is no agreement yet on what exactly “medium term” means.
The longer Greece keeps such a high surplus, the less it is likely to need debt relief. The IMF strongly insists that easing Greece’s debt burden is necessary, while Germany – Greece’s biggest creditor – strongly opposes it.
Germany wants the IMF to join the bailout, now shouldered by euro zone governments alone, mainly for credibility reasons.
The Fund says that if it were to participate, it would have to be the last rescue package for Greece and that means substantial debt relief offered now.
