World Economy

IMF Weighing Exit From Greek Bailout

IMF Weighing Exit From Greek BailoutIMF Weighing Exit From Greek Bailout

The International Monetary Fund is considering forcing Germany’s leadership to quickly grant wide-ranging debt relief for Greece or allow the fund to exit Athens’ bailout program after six years, according to a transcript of an internal IMF teleconference published by WikiLeaks.

The teleconference, between the head of the IMF’s European operations and its top Greek bailout monitor, is the clearest sign to date that the fund wants to leave Greece’s €86 billion ($97 billion) rescue to the European Union alone and wash its hands of a program that has led to a torrent of criticism, CNBC reported.

During the call, which occurred just two weeks ago, Poul Thomsen, head of the IMF’s European bureau, notes that Berlin is under intense political pressure because of the refugee crisis and suggests confronting Angela Merkel, the German chancellor, to either agree to debt relief or allow the IMF to exit.

German officials have repeatedly said they could not participate in Greece’s bailout without the IMF on board, and senior members of the Bundestag have warned Merkel they would reject new eurozone loans to Greece if only EU authorities were monitoring the program.

“Look, you Ms Merkel, you face a question, you have to think about what is more costly: to go ahead without the IMF? Would the Bundestag say, ‘The IMF is not on board’?” the transcript quotes  Thomsen as saying to his staff. “Or [does Merkel] pick the debt relief that we think that Greece needs in order to keep us on board? Right? That is really the issue.”

  Accurate Reflection

IMF officials would not immediately confirm the authenticity of the transcript, but one official involved in the talks said it accurately reflected Thomsen’s private and publicly-stated views, albeit in “more direct and colorful language.” Many of the points raised by Thomsen in the call have been made publicly on his IMF blog.

Greek officials, however, reacted angrily to the revelation, arguing it was evidence the IMF was “blackmailing” Germany on the debt relief issue.

“We will not allow anyone to play with fire and blackmail Greece or Germany or Europe,” said a senior Greek official.

The IMF teleconference came just days after Wolfgang Schauble, the powerful German finance minister, publicly said he was opposed to Greek debt relief—despite the fact eurozone leaders agreed to restructuring last July at a high-drama EU summit that agreed to a third bailout program.

The transcript shows IMF officials fretting that despite public claims eurozone leaders wanted to move quickly to agree debt relief—which has long been an IMF demand, since Thomsen believes Greece cannot survive economically with a large-scale restructuring—a decision will probably be delayed until July, when Greece is faced with its next big debt payment.