The approval by the Euro Working Group Thursday of Greece’s request for the early repayment of part of its debts to the International Monetary Fund buoyed the government, which is seeking to bolster its flagging popularity in the countdown to local and European elections later this month.
The approval by representatives of eurozone Finance Ministry officials of the Greek request for immediate repayment of 3.9 billion euros still needs the green light from ministers at a Eurogroup meeting later this month. And it is only part of Greece’s total debts of 9.4 billion euros to the IMF, meaning that the country will remain under the Fund’s supervision, even after the payment.
However, Greek officials played up the development as a sign of the country’s growing financial independence from its international creditors.
In recent speeches, Prime Minister Alexis Tsipras has systematically sought to distance his government from the IMF – which championed some of the harshest austerity in Greece – accusing his political rival, New Democracy leader Kyriakos Mitsotakis of embracing IMF policies.
Mitsotakis, for his part, accused the government of overtaxation and called on Tsipras to back his amendment for the abolition of a planned reduction to the tax-free threshold when it comes to Parliament next week.
“We can’t take anymore, taxes must finally be reduced,” he said.
In an address from Hania in Crete Friday, Tsipras is expected to hail the IMF repayment decision as a sign that the Greek economy is recovering. It is unclear whether he will provide details of a new round of pre-election handouts.
He is expected to hold a cabinet meeting in the coming days to finalize the measures that will likely include cuts to value-added tax and the ENFIA property tax and a one-off “13th pension” payment to retired civil servants.
In a related development, the board of directors of the European Financial Stability Facility (EFSF) Thursday approved debt relief measures for Greece totaling almost one billion euros, the European Stability Mechanism (ESM) said.
“Continuing on the reform path will enhance Greece’s growth potential, strengthen the country’s economy, and will also make it easier for Greece to repay its loans,” ESM Managing Director and EFSF CEO Klaus Regling remarked.