Euro zone ministers, Greece, fail to reach bailout deal
- Author: Zachary Reyes May 29, 2017,
May 29, 2017, 15:49
Greece's European Union creditors have once again failed to reach an accord over the amount of debt relief the Hellenic state should get, once the country's €86 billion bailout program ends in mid-2018. Athens needs the new aid installment before it has to repay about 7 billion euros to lenders in July.
The International Monetary Fund needs to see more realistic eurozone assumptions about Greece's economy and more detail on planned debt relief measures to join a bailout, IMF's European Department head Poul Thomsen said.
The talks will resume at the next meeting of eurozone finance ministers in June. There is also push back from this faction against any firm commitment to debt relief, which some say would remove incentive for Greece to continue reforms.
Despite another round of marathon talks yesterday, Greece's creditors failed to agree on fundamental elements of the country's bailout programme. He said he hoped for a deal at the next eurozone meeting on 15 June.
"The Eurogroup held an in-depth discussion on the sustainability of Greece's public debt but did not reach an overall agreement", the euro zone ministers said in a statement.
But diplomats said deep differences on debt relief remain, and the row has pitted Germany, the eurozone's most powerful member, against the International Monetary Fund.
Asked when euro zone ministers could release the next tranche of loans to Greece, the chairman of the ministers Jeroen Dijsselbloem told reporters: "If all goes well, today".
However, during these four decades, economic crises, structural gluts and financial panics are all possible, so counting in the likely cyclical recessions and other shocks, real GDP growth in Greece must be above 1.3 percent.
This would include dramatically extending grace periods and maturities on the loans far beyond what the eurozone has committed to so far.
"The German finance ministry does not want to specify mid-term debt (relief) measures to the extent required by the IMF", Tzanakopoulos said.
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.
The standoff came just hours after France and Germany pledged to deepen co-operation in the single currency and seize Brexit opportunities for their banking industries.
However, providing additional debt relief for Greece is politically unpopular in several European states, especially Germany. Macron's office said the president spoke Monday with Greek Prime Minister Alexis Tsipras and stressed "his determination to find an accord soon to lighten the burden of Greek debt over the long term".
"The feeling was at the end of the meeting that more work was needed to get the clarity that Greek people and markets would need to understand", Greek Finance Minister Euclid Tsakalotos said on his way out of the meeting.