Leaders of Chancellor Angela Merkel’s German conservatives largely support Greece’s new bailout plan before a parliamentary vote this week, but top party officials want the IMF to take part, sources involved in party talks on Monday said.
A German Finance Ministry official also described involvement by the International Monetary Fund as "indispensable" and German EU Commissioner Guenter Oettinger said: "We still need it."
The Bundestag is due to vote on the aid package on Wednesday and, while it is expected to be approved, many of Merkel’s conservatives may break ranks and reject the 86 billion euro ($95 billion) program.
"Everyone was aware that the IMF must remain on board," said one person involved in Monday’s meeting of senior conservative officials.
Merkel tried to reassure sceptical lawmakers on Sunday that the IMF would take part in the new bailout. She told broadcaster
ZDF that she was sure IMF chief Christine Lagarde would ensure its participation if conditions on Greek pension reform and debt relief were met.
Lawmakers from the chancellor’s Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), want the IMF involved because of its reputation for rigour in ensuring budgetary and reform targets are met.
But Lagarde, who has been pressing euro zone countries to provide Athens with "significant" debt relief, has said the IMF will wait until October to decide whether to participate. That would force German lawmakers to vote without any guarantees that the Washington-based institution will have a role.
In a nod to the IMF’s calls for debt relief, Merkel said on Sunday there was room to ease the burden on Greece by extending the maturities on its debt and reducing interest rates. Berlin opposes Greek calls for part of its debt to be written off.
Merkel and Finance Minister Wolfgang Schaeuble are due to meet their parliamentary group on Tuesday to urge the conservative lawmakers to back the bailout on Wednesday.
The Finance Ministry spokesman said Lagarde would propose further financial involvement by the IMF in the bailout only if Greece fulfils requirements on the implementation of reforms by October and a first review of the bailout is successful.
"I can’t give a precise timetable for the type of debt relief or the way ahead," the spokesman added.
German approval of the bailout is not in doubt because of the support of parties such as the Social Democrats, Merkel’s junior coalition partner, and the opposition Greens. But a rebellion by a large number of her allies would be a blow for Merkel, who remains highly popular after 10 years in office.
Last month, a record 65 lawmakers from Merkel’s conservative camp broke ranks and refused to back negotiations on the bailout. German mass-selling newspaper Bild estimated at the weekend that up to 120 CDU and CSU members out of 311 may refuse to back the government this time.
The paper also accused the government of repeatedly breaking promises in the Greece crisis: "Many red lines have been crossed, too many," it wrote in its Monday edition. [Reuters]