Greek Creditors Stall on Debt Deal
- Author: Leroy Wright May 29, 2017,
May 29, 2017, 19:11
The IMF on Tuesday demanded more detailed commitments from the eurozone on debt relief for Greece before it could accept joining the country's latest bailout and end a year-long row with Europe. The hope is that the release of bailout funds soon will shore up confidence that the country won't face bankruptcy again soon.
Brussels and the eurozone were at loggerheads with the International Monetary Fund (IMF) over the size and timing of any reduction in Greece's debt burden, which the IMF has insisted is a requirement for its participation in the country's third bail-out.
The eurozone's top official says a decision on whether Greece has done enough to get its hands on the next batch of rescue money that it's due from its bailout program could emerge later Monday.
"The Eurogroup today has made quite clear that it is ready and prepared to specify further what could be envisaged if needed, in terms of debt relief", Dijsselbloem said.
If Greece is able to achieve an average 1.3-percent yearly growth, and budget surplus of 2.6 percent, Greece's debt-to-GDP ratio will fall to an acceptable 60 percent in 2060.
"We indeed did not conclude, but our work will not be wasted", said EU Economic Affairs Commissioner Pierre Moscovici after the marathon talks.
By the end of the meeting, the ministers did little more than acknowledge the progress Greece has made in meeting the conditions required to receive a fresh installment of bailout funds.
The protracted nature of Greece's bailout program has been costly for the country.
Greece and its creditors have postponed an agreement to unblock a new disbursement from the Greek bailout and on debt relief measures.
While austerity measures over the past seven years have seen Greece's annual budget position improve markedly, the country's debt burden stands at around 180 percent, a level that the Greek government and the International Monetary Fund think is unsustainable in the long-term - hence the insistence on some debt relief.
France's new finance minister, Bruno Le Maire, said: "Everyone must make a step". They are also concerned that once Athens gets a debt deal, it would lose the incentive to continue reforms.
The IMF forecasts for Greece's debt needs "are not in line with those from the European institutions", he added.
Successive Greek governments have slashed spending in return for bailout money to avoid bankruptcy.
Greece's debt mountain stands at a towering 180 percent of annual output, and the country is now back in a recession despite emerging from its economic depression in 2014. With Germany's national election just a few months away, this is the last issue Merkel and Schäuble would want to be dealing with, especially since the biggest opponents of the bailouts come from their own camp. Governments have firmly ruled out any cut in what Greece owes, while interest-rate caps also pose political and practical obstacles.