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Greek Debt Deal Not Far
World Economy

Greek Debt Deal Not Far

A deal on debt relief for Greece is “not far”, France’s new Finance Minister Bruno Le Maire said ahead of crunch eurozone talks on the issue on Thursday.
“I am optimistic that we will have a good solution. We are not far from agreement,” Le Maire said ahead of a meeting with Greek Prime Minister Alexis Tsipras, AFP reported.
“We are really doing our best to find an agreement,” he had said earlier after seeing his Greek counterpart Euclid Tsakalotos. “It’s difficult. It’s complicated,” he said.
At the June 15 meeting, Le Maire said he planned to propose a “mechanism” of “flexibility” to lessen Greek debt repayment based on its economic growth.
“It’s a mechanism which should allow us to revise certain (debt) parameters based on Greek growth,” he told reporters.
The issue of debt relief for Greece has sharply divided its international creditors, the European Union and the International Monetary Fund, for months in the latest round of talks. The impasse has held up a tranche of bailout cash which Greece needs to repay loans in July, and Athens says its fragile recovery has also been impaired.
Tsipras has said he will ask EU leaders to resolve the issue at the end of June if no solution is forthcoming on Thursday. “Piling drama on the problem helps no one,” he said on Monday.
The Europeans expect Greece’s economy to grow strongly and its government to bring in large surpluses in revenue in the coming years, allowing it to pay down its debts.
But the IMF is less optimistic, arguing there must be further relief for Athens before it can label its debt sustainable and justify loaning Greece any more cash.
New French President Emmanuel Macron last month called Tsipras after his election, saying he was in favor of “finding a deal soon to alleviate the weight of Greece’s debt over time”.

 Compromise?
Macron’s position puts him at odds with Germany where Greek debt relief—following three different bailouts with public money for the country since 2010—is seen as a vote loser ahead of general elections in September. Macron explained his thinking about Greece in an interview to the Mediapart website two days before his election.
“I am in principle in favor of a concerted restructuring of Greek debt and in keeping Greece in the eurozone. Why? Because the current system is unsustainable,” he said.
Eurozone finance ministers and the International Monetary Fund are likely to strike a compromise on Greece on Thursday, paving the way for new loans for Athens while leaving the contentious debt relief issue for later, officials said on Monday, Reuters reported.
IMF head Christine Lagarde suggested a plan last week under which the fund would join the Greek bailout now, because Athens is delivering on agreed reforms, but would not disburse any IMF money until the eurozone clarifies what debt relief it can offer Greece.
IMF participation in the bailout, even without immediate disbursements, would be enough for the German parliament to back new eurozone loans to Athens, thus ensuring Greece would get enough cash in July to repay maturing debt and avoid default.

 

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