Eurozone fails to reach Greece debt deal amid International Monetary Fund row
- Author: Zachary Reyes May 24, 2017,
May 24, 2017, 11:52
Greece had hoped for clarity on more debt relief after legislating reforms, including pension cuts and tax hikes, demanded by its official creditors, but the Eurogroup meeting in Brussels on Monday failed to reach an agreement.
Speaking ahead of the meeting, Dijsselbloem said if "all goes well", then a deal can be reached that will allow the money to be disbursed "well in time" of a summer debt repayment hump for Greece.
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 almost forced the country out of the euro.
But, according to several sources, the deal was vetoed by Greece, which did not want the debt discussion to be separated from the disbursement decision.
They did not agree either on releasing new funds that Athens needs to repay 7.3 billion euros in loans maturing in July.
Earlier in the day, the French finance minister and his German counterpart pledged to work towards deeper integration of the single currency union.
Even though euro-area governments committed a year ago to a laundry list of potential measures to ease repayment terms on Greek bailout loans after 2018, the degree to which these measures will be implemented is still a subject of contention. Moreover, the German government, one of the most prominent sponsors of the relief package for Greece, does not yet have an internally coordinated vision of the prospects of the Greek bailout.
The meeting will be the first for French Finance Minister Bruno Le Maire, named to his post last week by Macron, a pro-EU centrist.
The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece's €315 billion ($354 billion) of obligations before it participates in the program.
"Greece has always been promised debt relief when its reforms are implemented", he said.
"The baseline scenario is for a deal at the June 15 Eurogroup meeting, with sufficient debt relief to allow the International Monetary Fund to stay attached".
The Euro is supported by a run of strong Markit PMIs, with the manufacturing, services and composite indices for France, Germany and the Eurozone largely advancing above forecast.
All that could happen only if Greece delivers on its reforms by mid-2018 and only if an analysis shows Athens needs the debt relief to make its debt sustainable. "There's been a shared effort to narrow the gap between positions- we haven't yet concluded but I hope under the guidance of the president of the Eurogroup it will possible three weeks from now".
Dutch finance minister Jeroen Dijsselbloem, chairman of the eurozone ministers' group, said: "We need to close that [gap between the International Monetary Fund and creditors] by looking at additional options or adjusting our expectations".
The country's debt burden stands at around 175%, a level that the Greek government thinks is unsustainable in the long-term - hence its insistence on some debt relief, at least in the form of lower interest payments and longer repayment terms.