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Greece wants Eurogroup to focus on short-, medium-term debt relief on May 24

TAGS: Economy, EU

Greece expects eurozone finance ministers to focus on short- and medium-term debt relief for Athens when they meet on May 24, government spokeswoman Olga Gerovasili said on Tuesday.

Finance ministers from the shared currency bloc are expected to assess next week whether Greece qualifies for new bailout loans and to discuss debt restructuring. Athens is hoping that reprofiling its mountain of debt will help it regain market access and convince its public that the six years of austerity they have endured are beginning to pay off.

“We expect the Eurogroup to talk about the short-term and medium-term decisions on debt relief,” Gerovasili told reporters. “A long-term solution is a bigger discussion.”

Cash-strapped Greece has been excluded from global debt markets since 2014. It agreed a third multi-billion-euro bailout last July and started talks with lenders last week on how to make its debt more manageable.

Eurozone finance ministers aim to draw up a “road map” at the May 24 meeting to secure the participation of the International Monetary Fund in the Greek bailout rather than finalize a full three-stage debt-relief program.

The eurozone is considering longer grace periods and maturities for Greece in the medium term. But it may also decide on whether more debt relief is needed to ensure that Athens’s debt-servicing costs are sustainable in 2018 if Greece meets its primary surplus target of 3.5 percent of GDP.

The IMF believes Athens will miss that target unless it is granted significant debt relief and takes extra measures. It has not yet decided whether it will participate financially in Greece’s bailout program, but its involvement is crucial for Germany.

Asked about the views of the IMF on debt relief, Gerovasili said that they were “always in the right direction.”

The Greek Parliament has already approved pension and income tax reforms demanded by its lenders and worth 2 percent of GDP.

Prime Minister Alexis Tsipras, who has a narrow majority of 153 seats in the 300-seat Parliament, hopes that a vote on tax hikes and new reforms on Sunday, two days before the Eurogroup meeting, will help the country during the talks.

Lawmakers will also vote on a contingency mechanism to impose spending cuts that will be activated only if Athens misses its fiscal targets.

[Reuters]

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