IMF firm on contingent lifeline

The precautionary program that the International Monetary Fund is proposing for Greece will ensure that the country’s smooth return to the markets continues and will ease the current assessment, as it will form the policy framework after the end of the bailout agreement, according to the acting head of the IMF’s European Department, Poul Thomsen.

The former head of the Fund’s mission in Greece echoed on Friday the statement of IMF Managing Director Christine Lagarde on Thursday about the Fund maintaining a lifeline to Greece, saying that “it would be preferable if we retained some kind of relationship.”

Speaking in Washington, Thomsen reiterated Lagarde’s assertion that Greece’s relationship with the Fund is evolving and stressed that “its characteristics will have to be discussed.”

Thomsen noted that the good news is Greece is gradually regaining access to the markets. He did add that the situation remains delicate, pointing to the recent growth in Greek bond yields. He said that the IMF has received no official notification from Athens regarding its desire to end the program and said that talks are about to start.

The Fund’s impression appears to be that tomorrow’s meeting between Lagarde and Greek Finance Minister Gikas Hardouvelis will not be the end of the road. Instead negotiations will continue to shape what comes next.

Meanwhile Eurogroup head Jeroen Dijsselbloem said in Washington that the sustainability of Greece’s debt should not become a problem given that the country has beaten expectations, adding that the eurozone finance ministers will discuss whether Athens requires further eurozone assistance in November and December.

“I don’t expect debt sustainability to become a problem,” the Dutch finance minister told the Atlantic Council on Friday. “Greece has done very well, at a high price, but they exceeded expectations” in terms of reforming its public finances and regaining market trust, highlighting the primary budget surplus the country has achieved.

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