Germany expects the International Monetary Fund to participate in Greece's bailout program, a finance ministry spokeswoman said on Wednesday, rejecting a newspaper report that Berlin was preparing for a deal without the global lender.
Divisions over labor reforms, fiscal targets and debt relief have prevented Greece and its foreign lenders from concluding a compliance review of its current bailout program, the third since 2010.
The IMF says it will only join in if this rescue is the country's last and it includes significant debt relief.
Bild reported on Wednesday that Finance Minister Wolfgang Schaeuble was preparing for a continuation of aid without the IMF – an option Greek officials said last week that the government in Athens would welcome.
The German mass-market daily gave no source for the information.
A spokeswoman for Schaeuble's ministry rejected the report. "We still expect an IMF participation," she said. "For us, this participation is promised and necessary."
Schaeuble last week already raised the possibility of a new program for Greece without the IMF should the Fund decide to bow out.
Bild said Schaeuble thinks the European Stability Mechanism (ESM), the euro zone's bailout fund, would be tapped to plug the hole left by an IMF departure.
Schaeuble, who argues that debt relief would take pressure off Greece to reform its economy, has said he favors shifting some of the European Commission's task of enforcing euro zone budget rules to the ESM, which as a non-political body would be better positioned to impose compliance.
The ESM declined to comment on Bild's report, which also said Germany's Bundestag lower house of parliament would vote on a modified program before a general election in September.
Lawmaker Eckhardt Rehberg, parliamentary spokesman on finance and budget issues for Chancellor Angela Merkel's CDU, said the Bundestag would have to vote on a new program if the IMF pulled out, "but I don't see such a scenario at the moment."
ESM Managing Director Klaus Regling said in an interview with Bloomberg TV this week that a bailout without the IMF was a "plan B."
Greece's EU lenders want the country to achieve and maintain a primary surplus – after interest payments – 3.5 percent of GDP beyond 2018, when its program ends. The IMF says that, unless Athens adopts more austerity measures and legislates them upfront, the surplus will only reach 1.5 percent.
Greek government officials said last week that Prime Minister Alexis Tsipras – who is sagging in polls – would welcome an IMF exit, hoping it might help conclude the review without legislating more austerity now.
To help break the impasse, Greece would be willing to discuss fiscal measures that would only be implemented if it missed budgetary targets after 2018. Tsipras said on Wednesday that Greece would conclude the second review of compliance with the program without legislating new measures beyond then. [Reuters]