Euro Working Group chief Hans Vijlbrief appeared on Wednesday absolutely certain there will be a total agreement at next Thursday’s Eurogroup, although the International Monetary Fund will not participate in the Greek program with any funds.
The Dutch head of the council of senior eurozone finance ministry officials stated that the IMF will be involved in the Greek program in some way, and if that is not through a new program, it will activate the process of Article IV that applies to all Fund members. He did appear a little concerned about the reaction of the markets if the IMF chooses not to participate fully in the Greek program.
Meanwhile Olivier Bailly, the head of European Economic and Monetary Affairs Commissioner Pierre Moscovici’s office, stressed the need for the Greek debt relief measures to carry the IMF’s stamp of approval. For the first time he admitted clearly that the IMF will not be a funding partner in the Greek program as there is no time left for that.
Despite Vijlbrief’s concern over the nonparticipation of the IMF through funding, it is certain that Greece will not ask for the activation of a precautionary line of credit that would have shielded the country in its return to the markets: “The Greek government would have to ask for it, but I do not see this becoming a reality,” said the EWG chief. Bailly added that no one in the Eurogroup believes Greece should get a credit line, not even Germany.
Vijlbrief noted that the final tranche Greece can expect will be between 11 and 12 billion euros, while the size of the cash buffer to allow Greece’s safe return to the markets has not yet been decided. As for the post-program period, Vijlbrief said there are three terms Greece must meet: It must continue implementing reforms, maintain fiscal discipline and remain politically stable.
On Thursday the disbursement of the remaining 1 billion euros from the third review is to be decided. It was postponed last week as Greece was not deemed compliant with the timetable for the payment of dues to suppliers and taxpayers.