German Finance Minister Wolfgang Schaeuble said Monday that if the International Monetary Fund is not part of the Greek bailout then it would become obsolete, essentially dousing government hopes that the current program could continue without the Washington-based organization.
“Should it not come to a successful second review [of the third bailout], and should the IMF draw the consequences from this, then the current program would be obsolete. The program was agreed to only on the expectation that the IMF would participate,” Schaeuble told the Wall Street Journal, adding that if it became obsolete, “then we would have a situation in which one would need to come up with something new. I wouldn’t recommend this to the Greek government.”
“The German Bundestag would first need to discuss and agree on whether or not it approves negotiating a new program,” he said.
European Stability Mechanism Managing Director Klaus Regling sounded a similar warning, telling Bloomberg TV that without the IMF, there would need to be a fundamental change in the program, which the Bundestag would have to approve. Regling went on to say, however, that despite there being no agreement on all the issues, “we must not ignore” that progress has been made, while Eurogroup chief Jeroen Dijsselbloem appeared cautiously optimistic, saying that “things are going well with Greece,” adding that access to international markets in 2018 is a feasible target compared to 2017. But he was quick to remind that Greece’s debt mountain was due to the fact that Greeks had lived beyond their means since joining the euro.
Meanwhile, with the second review of the country’s third bailout still hanging in the balance, the government is bent on finding a golden mean between what is ideal and feasible. Officially, Prime Minister Alexis Tsipras’s aides insist the leftist-led coalition has not abandoned the goal of wrapping up the review at the Eurogroup on January 27. But in reality Athens appears resigned to the fact that, as things stand now, a conclusion of the review over the next 10 days is a scenario which has slim chances of materializing. And, given this reality, the focus has now shifted to the end of February, which is considered the most plausible time for a settlement and a conclusion of the review.
What is clear to the government is that further delays could derail its objective to join the European Central Bank’s quantitative easing mechanism by the beginning of March. Failure to do so will usher in fresh doubts over whether Greece will have enough time to complete all the necessary actions that will ensure its smooth exit from the third bailout, which ends in August 2018. Aides also fear delays to the review’s conclusion will pose an obstacle to the target of reaching 1.7 percent of GDP primary surplus for 2017, while it will also trigger a renewed climate of uncertainty.