World Economy

EU, IMF Fail to Heal Greece Bailout Rift

Jeroen Dijsselbloem (2nd R) says Greece’s reforms need to be credible.
Jeroen Dijsselbloem (2nd R) says Greece’s reforms need to be credible.

Eurozone finance ministers failed to bridge deep divisions with the IMF over Greece’s bailout on Thursday, reaching no agreement on debt relief.

The International Monetary Fund and the 19-nation single currency area are battling over how much debt relief Greece needs, and over economic targets required of Athens that the IMF says are too stringent, AFP reported.

“Today we will not be able to go into depth on the Greek issue... We will have to wait,” said German Finance Minister Wolfgang Schaeuble, the Eurogroup’s most influential member, as he arrived for talks with his eurozone counterparts to discuss Greece.

The months of bickering have delayed progress of Greece’s €86 billion ($92.4 billion) bailout program agreed in 2015 and stalled crucial loan payments that Athens will need by this summer to avert rekindling the debt crisis.

The IMF, headed by the tough-talking Christine Lagarde, refuses to lend further to Greece without significant changes to the requirements demanded of the Greek government.

Despite the conflict, Eurogroup head Jeroen Dijsselbloem insisted that Lagarde had promised him that the IMF remained committed to the Greek bailout program.

“She reassured me that the IMF still has strong intent... to participate in the program in full,” said Dijsselbloem, who is also Dutch finance minister.

But he warned: “They’ve always made their terms very clear—reforms need to be credible, the fiscal path needs to be credible, and debt sustainability needs to be credible.”

Germany, Greece’s biggest creditor, says that Athens is up to the task of meeting the targets without further debt relief and has called on the Greek government to deliver on reforms. “It’s up to the Greeks to solve the problem,” said Schaeuble.

At heart of the problem is a demand by the eurozone that Greece deliver a primary balance, or surplus on public spending before debt repayments, of 3.5% of GDP.

The target is very high—and most countries do not even come close—but Germany and other eurozone hardliners are insistent that Greece reach it over the next few years.

The feud has become further embittered as key elections approach in Germany, the Netherlands and France, with impatience toward Athens growing.

Already huge, Greece’s debt hit €311 billion in 2016 or around 180% of output, according to the latest EU data.

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