FT — Wolfgang Schäuble, Germany’s finance minister, has ruled out granting any debt relief for Greece, rebuffing a key demand of the International Monetary Fund even as he warned that the current bailout would fall apart without the IMF’s participation reports the Financial Times.
Granting Greece debt relief would do it a disservice, German Finance Minister Wolfgang Schaeuble said late on Tuesday, in an interview with daily newspaper Passauer Neue Presse.
“Whoever says ‘we will relieve your debts’ is doing Greece a disservice,” the Passauer Neue Presse quoted Schaeuble as saying.
The intervention on the sidelines of the IMF’s spring meetings in Washington highlighted the growing tensions between the fund and its European bailout partners over Greece, which is now in its sixth year of an economic rescue programme.
It came as the IMF warned again that it would not be able to participate in any bailout for Greece without meaningful long-term debt relief and raised the possibility that it would not contribute financially and adopt only a monitoring role.
Mr Schäuble called the debt relief issue a distraction from the need for other tough reforms and said it was “not necessary”. “That is indisputable,” he said on Friday. “That is an attempt not to do what irrefutably must be done.”
But he also said it was inconceivable that an €86bn bailout of Greece negotiated last year could proceed without IMF participation.
Raul Thomsen of the IMF insisted again that the IMF would not be able to take part in the new Greek bailout without meaningful debt relief. He also said, however, that the IMF was open to a “menu of options” and that achieving debt relief did not necessarily mean a reduction of principal owed.
At the same time German officials are losing confidence in the Commission’s ability to keep Greece on the straight and narrow. That view has been reinforced by the greater fiscal laxity allegedly granted by Jean-Claude Juncker, the commission president, to rulebreakers in Italy and France.
The IMF is under pressure from many of its non-European shareholders not to grant Greece any special treatment after bending its rules to participate in previous bailouts. That has put an emphasis on bringing Greece’s debts down to levels the fund can label sustainable.
The IMF has paid out little to Greece in recent years. Since 2013 it has made just one disbursement of rescue funds.
