Signs point to IMF staying on in the Greek program


The majority of analysts expect that the International Monetary Fund will remain in the Greek program, as the time approaches when the fund’s Board of Governors will reach a definitive decision on the matter in February.

On Thursday consultancy Eurasia Group issued an opinion to that effect, although IMF spokesman Gerry Rice offered no hint in either direction. He only reiterated the positions of the Fund regarding the lightening of the Greek debt and the continuation of the reform effort. Eurozone sources are also speaking of a thaw in relations with the IMF as far as the quadriga of Greece’s creditors are concerned.

Eurasia said in a note that the IMF is expressing its desire to activate the provisional agreement with Greece and formally join the Greek program alongside the eurozone.

The writer of the note qualifies this development as a strange shift in the story. He explains that the IMF’s change of heart on Greece is not due to this country, but is mainly a political decision as the leadership of the Fund has discerned the risk of isolation if it does not continue in the Greek program. “That is particularly important,” it notes, “given the the difficult relations with US President Donald Trump. A competitive relationship with the EU would leave the IMF isolated by its two main stakeholders.”

Consequently IMF officials have started approaching their eurozone counterparts and are seriously examining the activation of the program, although the deal is not yet closed. The same source does not consider likely the disbursement of a tranche by the IMF, and the only positive result from this participation would be the positive message to the capital markets.

Rice reiterated that the decision of the Fund relies on two pillars: The application of reforms, where there is progress, and the lightening of the national debt so as to ensure its sustainability. Talks are ongoing and when these two issues are satisfied “we will go to our Board of Governors and activate the program ‘in principle,’” he stated.