close
Thursday March 28, 2024

Eurozone hopes for Greece aid deal but IMF row brews

By our correspondents
May 23, 2017

Brussels: Eurozone finance ministers said they hoped to reach a deal for fresh bailout cash for Greece on Monday, but a row with the IMF over debt relief heated up.

Ministers from the 19-member single currency bloc sought agreement at talks in Brussels after Greek lawmakers last week fulfilled the eurozone´s latest demands for painful austerity measures.

The fresh reforms opened the way to unlock the latest tranche of Greece´s 2015 mega-bailout so that Athens can repay a debt of 7.0 billion euros ($7.8 billion) in July.

"I expect and I am working on a deal today but it will not be the end deal," Eurogroup head Jeroen Dijsselbloem said as he arrived for talks. Any formal commitment to more debt relief will "only take place next year", Dijsselbloem added, putting the Europeans at odds with the International Monetary Fund, which wants it now.

"It´s time for the IMF to come aboard," he added. The International Monetary Fund has made more debt relief a condition of taking part in Greece´s third and latest 86-billion-euro ($94-billion) bailout, agreed two years ago.

Greece´s debt mountain stands at a towering 180 percent of annual output, the legacy of a crisis that brought panic to the markets and nearly forced the country out of the euro. The IMF remains far apart from Europe, especially hardline Germany, on the level of need for debt relief measures.

"I hope today we can come to a political solution, but naturally we cannot finalise as we still require a conformity report and other details," said German Finance Minister Wolfgang Schaeuble, the Eurogroup´s most influential member.

The IMF forecasts for Greece´s debt needs "are not in line with those from the European institutions," he added. Any further delay on fresh aid and debt relief will infuriate the Greek government, which pushed through the tough reforms in order to be ready for Monday´s talks.

"Our country... has fulfilled its obligations totally and on time," Greek Finance Minister Euclid Tsakalotos said ahead of the crunch talks. "There is no excuse for further delay on the issue of the debt relief," he said.  Newly elected French President Emmanuel Macron said he backed debt relief for Greece in a phone call on Monday with Greek Prime Minister Alexis Tsipras.

Macron told Tsipras he was in favour of "finding a deal soon to alleviate the weight of Greece´s debt over time," a statement from the presidency said. But Macron´s position puts him at odds with Germany where Greek debt relief -- following three different bailouts since 2010 -- is seen as a vote loser ahead of general elections in September.

Led by tough negotiator and former French finance minister Christine Lagarde, the IMF says Greece´s debt is unsustainable and will be "explosive" in the long run, requiring a more ambitious plan from Europe.