BUSINESS

Berlin seen to keep tough stance on Greece

ELENI VARVITSIOTIS

German Finance Minister Olaf Scholz

TAGS: Finance

Berlin appears unwilling to soften its tough stance despite the formation of a new government, insisting that any measures to ease Greece’s debt should come with strict terms and conditions. As staff-level talks on Athens’s demand for debt relief reach a point where political decisions will be needed for the matter to progress, Greek Finance Minister Euclid Tsakalotos will be flying to the German capital on Friday to hold talks with his counterpart, Olaf Scholz.

With the clock also ticking for the International Monetary Fund’s decision on whether it will participate in the Greek program or not, the eurozone needs to decide on a framework for the lightening of the Greek debt as fast as possible.

To this end, the head of the IMF’s European program, Poul Thomsen, spent a few hours in Brussels on Thursday participating in the so-called Washington Group, a task force made up of the heads of the creditors’ representatives.

These meetings tend to result in some of the most important decisions concerning Greece being reached and are necessary for the resolution of pending issues by leading players. It was here that Thomsen set out on Thursday the conditions for Fund’s participation in a new program for Greece, stepping over several red lines set down by the Europeans.

As was recorded at Thursday’s Euro Working Group, there has been particular progress with respect to the so-called French mechanism, which links the size of debt relief to the growth rate. However, the council of senior eurozone finance ministry officials also agreed that certain political decisions are needed for work of a technical nature to proceed and for the IMF to give its backing.

According to two eurozone officials, the current blueprint that is being discussed says that the country’s growth rate will be examined over the next five years and that any debt easing that will be granted should be proportionate to the average rate stemming from estimates.

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