IMF said to consider Greece most unhelpful client in history
International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful client their organization has dealt with in its 70-year history, according to two people familiar with the talks.
In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.
German finance officials said trying to persuade the Greek government to draw up a rigorous economic policy program is like riding a dead horse, the people said, while the IMF team said Greece’s attitude to its official creditors was unacceptable. The German Finance Ministry didn’t respond to multiple requests seeking comment.
Concern is growing among officials that the recalcitrance of Prime Minister Alexis Tsipras’s government may end up forcing Greece out of the euro, as the cash-strapped country refuses to take the action needed to trigger more financial support. Tsipras is pinning his hopes for a breakthrough on a meeting with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker this week in Brussels.
EU Summit
“These are difficult talks,” Merkel told her parliamentary group Tuesday about the negotiations with Greece, according to two participants. She said that the outcome of the talks is completely open, according to the two.
The Greek government is seeking a political deal at a European Union summit starting Thursday to unlock funds from the country’s 240 billion-euro ($254 billion) bailout package, government spokesman Gabriel Sakellaridis said in an interview on Skai TV Wednesday.
“After one-and-a-half months of contact, we believe that for there to be a political solution, it is important for the euro-area’s big countries to weigh in,” Sakellaridis said. “We’re not downplaying technical discussions, but we want there to be a framework, and for that we’re asking for a political solution.” Sakellaridis could not immediately be reached for comment on the Tuesday conference call.
Euro-region finance ministers are urging the Greek government to draw up a plan to fix their economy so the bloc’s taxpayers won’t balk at further support. As Tsipras challenges his creditors to blink first, his government’s money is running out, raising the prospect of a cash crunch as early as this month. The country faces more than 2 billion euros in debt payments Friday.
Capital Controls
The call with euro-area finance officials came after the group’s chairman, Dutch Finance Minister Jeroen Dijsselbloem, said the country could use capital controls to remain in the currency union.
“It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” Dijsselbloem told BNR Nieuwsradio. For the 2013 Cypriot bailout, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”
Greek stocks dropped today, with bank shares losing 5.1 percent as of 11:27 a.m. local time, after Djisselbloem’s comments on capital controls. The benchmark Athens Stock Exchange was down 1.8 percent. Yields on three-year bonds rose 9 basis points to 20.5 percent.
Minimal Progress
While technical discussions have begun with Greece over how to implement a Feb. 20 euro-area finance ministers’ agreement for a four-month extension of Greece’s loan, progress so far has been minimal, according to the people involved in the talks. Officials from the institutions monitoring the bailout said during the meeting that Greece is unilaterally pushing measures through parliament that have an unclear fiscal impact and without consulting them, a person familiar said.
Greece’s parliament will vote Wednesday on measures to deal with the country’s social crisis, including subsidizing electricity, food and housing for households in poverty. The government Tuesday also submitted legislation for repayment of tax arrears in 100 installments to be voted on Friday, which it hopes will provide a boost to the state coffers.
Without more support, the Greek government may run out of cash as early as this month as the debt payments come due Friday and government salaries and retiree pensions must be paid March 27. Greece plans to auction 1 billion euros of 13-week treasury bills Wednesday. As much as 60 percent of the auctioned amount can be tapped on top of that in non-competitive and second-day bids.
Morgan Stanley, UniCredit and Fitch Ratings have all highlighted the risks of Greece leaving the euro in recent days, citing the risks of Tsipras’s approach to negotiations.
[Bloomberg]
