The News
The News
Monday 04 of July 2022

Greece Urges EU and IMF to Wrap Up Bailout Review as Talks Resume


A protester holds a banner next a riot police cordon during a demonstration outside a central hotel where Greek Finance Minister Tsakalotos meets with the representatives of the country's international lenders in Athens,Photo: Reuters/Alkis Konstantinidis.
A protester holds a banner next a riot police cordon during a demonstration outside a central hotel where Greek Finance Minister Tsakalotos meets with the representatives of the country's international lenders in Athens,Photo: Reuters/Alkis Konstantinidis.
Greece needs 5 billion euros to repay loans from the International Monetary Fund and maturing bonds to the European Central Bank, as well as unpaid domestic bills

ATHENS – Greece urged its international lenders on Monday to conclude a key bailout review swiftly, as talks on its fiscal progress resumed after the leak of a transcript in which IMF officials apparently mooted scare tactics to get a deal.

Prime Minister Alexis Tsipras hopes that a successful review, which will unlock an estimated 5 billion euros in bailout funds, will pave the way for talks on debt relief and convince austerity-weary Greeks that their sacrifices are paying off.

Greece's Prime Minister Alexis Tsipras is hopeful for a successful review. Photo: Reuters/Francois Lenoir.
Greece’s Prime Minister Alexis Tsipras is hopeful for a successful review. Photo: Reuters/Francois Lenoir.

The 5 billion euros are needed to repay loans from the International Monetary Fund and maturing bonds to the European Central Bank, as well as unpaid domestic bills.

Greece signed up to a bailout worth up to 86 billion euros in 2015, its third international financial lifeline since 2010, which hauled it back from the brink of leaving the euro zone. So far, it has received 21.4 billion of an initial 26 billion euro tranche.

The review has been adjourned twice since February, mainly due to a rift among the lenders over the estimated size of Greece’s fiscal gap by 2018, and disagreements with Athens on pension reforms and the management of bad loans.

“The negotiation must be concluded immediately, without unrealistic demands for additional measures beyond those set out in the July bailout agreement,” Tsipras’ office said.

The WikiLeaks site on Saturday published what it said was the transcript of a March 19 conference call by three senior IMF officials. In it, they discuss tactics to apply pressure on Greece, Germany and the European Union to reach a deal in April.

The IMF has fought shy of participating in the bailout without a firm promise of debt relief for Greece from the EU, but Germany, while keen for the IMF to take part, has said relief cannot be discussed until Athens has demonstrated compliance with the terms of the bailout.

IMF Managing Director Christine Lagarde said on Sunday that suggestions that IMF staff planned to push Greece closer to default as a negotiating manoeuvre were “simply nonsense.”

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Greek Finance Minister Euclid Tsakalotos met inspectors from the European Commission, the European Central Bank, the European Stability Mechanism and the IMF in Athens. “The word (WikiLeaks) was not mentioned,” he told reporters.

Another government official said Athens would present tax measures on Tuesday worth 1 percent of gross domestic product to plug a fiscal hole and meet a target of a 3.5 percent primary surplus in 2018.

Lagarde said in a letter to Tsipras that a bailout deal was “still a good distance away.”

A protester holds a banner during a demonstration outside a central hotel where Greek Finance Minister Euclid Tsakalotos meets with the representatives of the country's international lenders in Athens. Photo: Reuters/Alkis Konstantinidis.
A protester holds a banner during a demonstration outside a central hotel where Greek Finance Minister Euclid Tsakalotos meets with the representatives of the country’s international lenders in Athens. Photo: Reuters/Alkis Konstantinidis.

Germany’s Finance Ministry said it still expected the review to be wrapped up in late April or early May, but a debt haircut was not up for discussion at the moment. A spokesman played down differences with the IMF, saying German Finance Minister Wolfgang Schaeuble and Lagarde were in “constant, close contact.”

But the transcript has renewed worries about Greece’s public finances. Greek two-year bond yields jumped about 2 percentage points to a one-month high on Monday.

“Greece’s deep-seated problems of unsustainably high debt and a fundamental lack of competitiveness inside the euro zone would see doubts about its future inside the currency union resurface regularly,” said Jonathan Loynes, Chief European Economist at Capital Economics. “The next chapter of the Greek tragedy could be about to begin.”

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