World Economy

IMF to Stay Involved in Greece Bailout Talks

Christine Lagarde (L) and Wolfgang SchaubleChristine Lagarde (L) and Wolfgang Schauble

The International Monetary Fund’s chief has reassured German Finance Minister Wolfgang Schauble that the IMF plans to remain constructively engaged in talks about further aid for Greece, a spokesman for Schauble said Friday. 

Christine Lagarde spoke with Schauble about Greece’s bailout program during the World Economic Forum in Davos this week and told him the IMF aimed to continue its participation, the spokesman told a regular government news conference, MENAFN reported. 

The German Finance Ministry this week denied a report in Bild newspaper that Berlin was preparing for a deal without the IMF, which has said it will take part only if it includes significant debt relief. 

“Lagarde again reassured the finance minister that the IMF is participating constructively in the ongoing discussions and continues to work for a quick agreement on full participation in the rescue program, including funds from the IMF, the spokesman said.  He said it was speculative to discuss what Germany would do if the IMF did pull out. 

Germany, Europe’s largest economy, wants the IMF to have a stake in the bailout to give the rescue plan greater credibility, but also opposes granting Athens significant debt relief. 

Disputes 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. 

Schauble last week raised the possibility of a new program for Greece without the IMF should the fund decide to bow out. Bild said Schauble thinks the European Stability Mechanism, the eurozone’s bailout fund, would be tapped to plug the hole left by an IMF departure. But his spokesman declined to discuss that prospect.

Meanwhile, the country’s prime minister said on Wednesday that Greece will conclude the second review of its bailout progress without legislating new austerity measures beyond 2018, when the aid program ends.

“The exit from the program in mid-2018 is visible,” Alexis Tsipras told parliament. “The bailout review will be concluded, and it will be concluded without legislating additional measures for beyond the end of the program.”

Athens wants a fast conclusion of the review to be included in the European Central Bank’s bond buying program, which would pave the way for its return to bond markets.

But the review has stalled due to differences among its official creditors—European Union institutions and the International Monetary Fund—over the country’s ability to meet fiscal targets beyond 2018.

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