IMF-EU debt deal is what stands between Athens and new loans
Euro zone finance ministers may agree on Monday to release new loans to Greece but are likely to struggle to convince the International Monetary Fund to join the bailout by keeping the prospect of debt relief for Athens highly conditional.
Greece needs new cash from the euro zone to avoid a default in July when it has to repay some 7.3 billion euros worth of maturing loans. To get the money, the Greek parliament approved pension cuts and tax hikes last Thursday.
Euro zone officials said a report prepared for the ministers’ meeting on whether Greece has implemented “prior actions” — laws that have to be passed to make the reforms stick — was positive, paving the way for disbursement.
Asked when euro zone ministers could release the next tranche of loans to Greece, the chairman of the ministers Jeroen Dijsselbloem told reporters: “If all goes well, today.”
But the main purpose of the talks — to get the IMF to join the bailout — may be tough to achieve because the IMF wants the euro zone to commit now, more firmly and in greater detail to debt relief for Athens, even if it were to happen only in 2018.
This is difficult to swallow for Germany, which faces elections in September, and several other countries, which all want to retain some leverage over the Greek government to make sure it delivers on all the promised reforms until 2018.
“We have to see how we can find a solution with the IMF, so that the IMF can be part of the program without breaching its rules. That will be one of the difficult issues,” German Finance Minister Wolfgang Schaeuble said.
Belgian finance minister Johan Van Overtveldt cautioned against debt relief promises and noted Greece was already getting cheaper financing than even his own country thanks to the ultra-low borrowing costs of the euro zone bailout fund ESM.