Bloomberg — Finance Minister Wolfgang Schaeuble raised the prospect of renegotiating Greece’s bailout just as Germany heads toward elections, saying he’d have to seek lawmakers’ backing for a new program if the International Monetary Fund bows out.
“A solution within the European currency system” would be an alternative if the IMF“decided for some reason to stop participating,” Schaeuble said in an interview with Sueddeutsche Zeitung. That would require new bailout negotiations with Greece, and “the Europeans would have to be sharply better at enforcing the agreed conditions.”
The comments signal a departure from Germany’s position that IMF participation is a precondition for German backing to the lifeline keeping Greece afloat since 2010. Chancellor Angela Merkel’s government has been at loggerheads with the Washington-based fund over the extent of relief measures needed to bring Greek debt back to a sustainable path.
This change in Schaeuble’s position is not a positive outcome for the Greek government who want a swift conclusion to the second evaluation so that Greece can take advantage of the few remaining months of the QE programme. Any bailout renegotiations are not likely to be concluded before the german elections which will also leave Greece once again exposed to large loan repayments by the summer and a renewed risk of default.
The second review of the latest Greek bailout is almost one year behind schedule amid disagreements between the IMF and Europe over the sustainability of the Greek debt and the size of the primary surplus targets.
As a result the lenders are delaying the second evaluation and are debating new austerity measures using as an excuse the abolition of collective bargaining as exists in the rest of the EU, and further energy-market reform.
Perhaps Mr Schaeuble has in mind another solution, one outside the European currency system.
“We know that the IMF has reconfirmed its intention to recommend to its executive board a new financing arrangement for Greece,” Alexander Winterstein, spokesman for the European Commission said Friday. “And there is no reason for me now to speculate on hypothetical scenarios.”
