BUSINESS

Berlin, ESM unhappy with early IMF payoff

TAGS: Finance

The German Finance Ministry holds a negative view of the prospect of Greece paying off its debt to the International Monetary Fund early, according to a report in German financial newspaper Handelsblatt on Friday.

“We continue to perceive with serious reservations an early repayment of the IMF,” reads a note by the ministry led by Olaf Scholz which Handelsblatt has seen. The report explains this negative attitude is based on the fear that this development would be seen as an IMF departure from Greece, which Berlin would want to avoid. Both the German ministry and the Bundestag have always insisted on the Fund remaining in the Greek bailout program for its know-how in crisis management.

The German daily added that Prime Minister Alexis Tsipras’s promise to expel the Fund from Greece will not materialize, as that would require the consent of the German parliament; the Bundestag will only give the green light for the early repayment if the future role of the IMF is safeguarded for future assessments of the Greek economy, Handelsblatt pointed out.

The same message came from the spokesman of the European Stability Mechanism (ESM). He told Handelsblatt that the IMF will need to participate in the monitoring of Greece’s progress even after the completion of the ESM program last August. “This is also the role that the IMF will have in the future in Greece,” he told the German newspaper, adding that the final say belongs to the eurozone member-states.

Meanwhile, Scholz’s predecessor, Wolfgang Schaeuble, said in an interview with the Financial Times on Thursday that Greece should have taken a 10-year timeout from the bloc.

He went on to admit he had floated the idea of a temporary Greek exit with Giorgos Papaconstantinou, his Greek opposite number from 2009 to 2011, and pushed for it again during the thorny negotiations of 2015, after leftist SYRIZA came to power on a promise to challenge the country’s creditors.

Schaeuble even revealed he came close to resigning when Chancellor Angela Merkel rejected his recommendation to cut Greece loose.

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