No debt relief or bailout money yet for Greece

by Garry Watts May 28, 2017, 2:16

Euro zone Finance Ministers and the International Monetary Fund will seek a deal today on Greek debt relief.

Greece will receive billions of euros to repay the institutions it has borrowed money from in time for a crucial July deadline, avoiding another situation that could plunge the country into crisis - as when it almost defaulted on its loans in 2015.

After almost eight hours of talks and multiple draft compromises, Athens and its creditors couldn't reach an accord that would ease Greece's debt and that would convince the International Monetary Fund (IMF) to agree to help finance the country's bailout.

Participation in this so-called quantitative easing is a key policy aim for Greece's Syriza government, as it would boost investor confidence and prepare the country's return to debt markets.

However, the Eurogroup did not reach an overall agreement after an in-depth discussion on the sustainability of Greece's public debt, because a possible gap "between what could be done and what some of us had expected" was unable to be closed.

EU Economics Commissioner Pierre Moscovici also said he saw a deal at the next Eurogroup meeting, in Luxembourg on June 15.

He said 3.5 percent of gross domestic product was a high primary surplus target which, however, "we were forced to accept".

France's Finance Minister Bruno Le Maire, center, talks with Italy's Finance Minister Pier Carlo Padoan, right, and Greece's Finance Minister Euclid Tsakalotos prior to a meeting of Eurogroup finance ministers at the.

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German Finance Minister Wolfgang Schaeuble told reporters before the meeting that Greece's new law is a "good step".

The chairman of euro zone finance ministers Dijsselbloem said that work was progressing for the disbursement to take place "before the summer".

Schaeuble made clear, however, that Germany, which faces elections in September, could not meet the IMF's demand to promise Greece debt relief already now.

Ministers from the 19-member single currency bloc must confront the sensitive topic at talks in Brussels after Greek lawmakers fulfilled the eurozone's latest demands for painful reforms in a vote last Thursday.

But officials said the size of the surplus afterwards was still under discussion and there were also differences on economic growth assumptions - especially that forecasts used for debt relief plans spanned dozens of years.

On Monday, French President Emmanuel Macron said his new administration will push for a Greek debt relief deal. The IMF has raised doubts about Greece's ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook.

Schaeuble, as well as several International Monetary Fund economists, agree that Greece should demonstrate its ability to decrease its budget deficit and achieve sustainable economic growth by the early 2020s through an economic reform package that would include stricter austerity, improved investment climate, deregulation, and abandonment of the most costly social programmes.


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