Chasm between IMF, Berlin on Greek debt relief seems to grow

Chasm between IMF, Berlin on Greek debt relief seems to grow

The chasm between Germany and the International Monetary Fund over the issue of Greece's debt appears to be widening rather than closing, Kathimerini understands, following a meeting of top European and IMF officials on Monday.

A session of the so-called Washington Group — representatives of Greece's creditors as well as the governments of the major European economies of Germany, France, Spain and Italy — on Monday simply appeared to highlight the differences of opinion regarding how Greece's debt mountain should be handled.

Germany's stance appeared to be much stricter than it has been in recent months with Berlin insisting that any debt relief be tied to specific terms and conditions.

Specifically, German officials want further debt relief to be given only following approval from certain European parliaments including the Bundestag.

Poul Thomsen, the head of the IMF's European department, who attended the meeting on Monday, countered that Berlin's conditions were not acceptable.

He reiterated the IMF's conditions for joining the Greek program, namely that Greek debt must undergo substantial restructuring.

The country's debt must be sustainable, he repeated, noting that calculations must be made on the basis of the IMF's forecasts for growth, not those of the Europeans which are more optimistic.

He added that an agreement on Greek debt must be reached by the June 24 Eurogroup if the IMF is to join the country's third bailout before it expires in August. 

In comments to Kathimerini, one European official attributed the hardening of stance, in particular by Berlin, to "negotiating tactics," noting that such behavior was common in the countdown to an agreement. 

Officials on Monday also discussed the disbursement of 1 billion euros from the European Stability Mechanism which must be done before a June 15 deadline. 

Representatives of Greece's creditors are due in Athens on Tuesday ahead of the scheduled resumption of talks on Wednesday. The aim is to reach a staff level agreement by Saturday. 

One official told Kathimerini that Geeek officials are lagging behind a bit in the enforcement of 88 so-called prior actions linked to the fourth, and final, review, but it appears that auditors might cut Athens some slack. 

Meanwhile, however, German and Dutch officials indicate that the slower pace of reforms back their argument that strict conditions should be attached to any debt relief for Greece. 

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