Reuters — The International Monetary Fund will not join the Greek bailout programme but will likely accept a special advisory status with limited powers that keeps it at the table, two senior sources with direct knowledge of the proposals said.
The IMF has been holding out for more than a year over the terms under which it would participate in any new program, arguing that the financial targets set in the European bailout are unrealistic without major debt relief.
But the Fund is increasingly resigned to European resistance to debt relief for Greece and it is now in talks to accept a newly created role that would let it play a part with limited formality, the sources said.
“It will be more than an advisor but the role will not have the strict conditionality, like the compliance and economic health checks every three months,” one of the sources said.
Talks between Greece, its European creditors and the IMF have been at an impasse since German finance minister Wolfgang Schaeuble insisted on the IMF taking part but rejected calls from IMF Managing Director Christine Lagarde for a big debt restructuring.
“This way Lagarde can go to the board and say, hey, ‘I’m not violating our rules’ and Schaeuble, whose government is facing an election next fall, can say, ‘see, I have the IMF on board'” the source said.
The exact nature of the IMF’s role has not been decided but it would have more powers than a simple advisor and would for example be responsible for drawing up certain proposed agreements and negotiating documents, coordinating with the Greek and European Union sides.
“They won’t put money into the programme but it won’t be just technical assistance; they will probably take a special advisory role to be created especially for the Greek bailout,” the second source said.
“Talks this week just made it clear that the IMF just can’t come on board formally.”
“They will remain part of the troika and be at all the talks,” the source added.
The IMF was not immediately available for comment on the what the sources said.
Poul Thomsen, director of the IMF’s European Department, said on Friday that the IMF is still “fully engaged” on Greece but is insisting on debt relief, although this need not come in the form of principal reduction.
“We have not changed our mind on this. This discussion we will have in the coming months,” Thomsen said.
The Greek economy has suffered from a deep recession with demand weighed down by fiscal cutbacks, a heavy tax burden, capital controls and a lack of investment.
The sources added that while the IMF is officially expecting the economy to grow by 0.1 percent, the actual figure is still likely to be in negative territory. That is far short of the IMF’s 2.8 percent target for next year in the Fund’s latest economic projections.
