International Monetary Fund needs more realism in euro zone assumptions on Greece
May 27 2017 by Johnny Bowman
Ministers next meet on 15 June, but Greece needs the new funding in order to make a €7.3m (£6.3bn) loan repayment due in July.
Greek lawmakers approved a reforms package last Thursday that includes pension cuts and tax hikes as demanded by the country's creditors to pave the way for the disbursement of bailout funds totaling more than Euro 7 billion and to begin talks on debt relief.
"We accept the main assumption of the May 2016 agreement that it does not have to be finally approved, calibrated or delivered before the end of the programme (bailout) but we need more specificity on what will come at the end of the programme", Thomsen said.
"We have made huge progress on the policy package on which so much work had been done in the last months and on which an agreement had been reached between Greece and the institutions", Dijsselbloem said.
French Finance Minister Bruno Le Maire, named last week, is joining his peers for the talks, and traveled to the Belgian capital with Wolfgang Schaeuble, his counterpart in Berlin who has been a vocal critic of Greece over the seven years of its bailout era.
Schaeuble made clear, however, that Germany, which faces elections in September, could not meet the IMF's demand to promise Greece debt relief already now.
Greece is part way through its third bailout deal, worth €86bn.
The group of ministers and representatives from the four lender institutions - the European Commission, the European Union's executive arm; the European Central Bank; the International Monetary Fund; and the European Stability Mechanism - met in Brussels for nearly eight hours Monday and walked out close to midnight with few results to show.
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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.
In an interview with German daily Süddeutsche Zeitung, Gabriel, a member of the Social Democrats (SPD), the junior government coalition partners, said: "Greece has always been promised debt relief when its reforms are implemented".
The new delay on fresh aid and debt relief will infuriate the Greek government, which pushed through the tough reforms to be ready for Monday's talks.
This would include dramatically extending grace periods and maturities on the loans far beyond what the eurozone has committed to so far.
But some European countries, including Germany, say any debt relief should be considered in 2018, anxious that concessions could affect the pace of economic reforms in Athens.
Lender institutions and finance ministers from the 19 Eurozone countries agreed to help Greece pay back almost $8 billion it is required to by July.
Led by the tough negotiator Christine Lagarde, the International Monetary Fund says Greece's debt is unsustainable and will be "explosive" in the long run, requiring a more ambitious plan from Europe.
Though Greece emerged from its economic depression in 2014 and its annual budget position has improved dramatically, the economy is back in recession, having shrunk for two straight quarters. Some analysts blame the economy's stalling on the row over the bailout negotiations.