Own­er­ship first, then debt re­lief

Draghi says re­form im­ple­men­ta­tion must come be­fore restruc­tur­ing, over which IMF and eu­ro­zone are at odds

Kathimerini English - - Front Page -

The Greek gov­ern­ment must fo­cus on own­er­ship of its bailout pro­gram and then seek debt re­lief, which is also nec­es­sary for the coun­try, Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi has told Sun­day’s Kathimerini.

In an in­ter­view, Draghi said that “strong own­er­ship” of the pro­gram, Greece’s third since May 2010, and “de­ter­mi­na­tion” to im­ple­ment it on the part of Prime Min­is­ter Alexis Tsipras and his two-party coali­tion will be vi­tal in the months ahead.

Draghi said that im­ple­ment­ing the struc­tural re­forms that Greece’s lenders have asked for would lead the coun­try’s econ­omy back to growth. The ECB chief said it is vi­tal that the gov­ern­ment does not cast doubt on the pro­gram’s tar­gets. He wel­comed Tsipras telling his cab­i­net that their goal must be to im­ple­ment the mea­sures with­out de­lay and en­sure that Greece passes the up­com­ing first re­view car­ried out by the in­sti­tu­tions.

“The Greek gov­ern­ment will have to show that it has as­sumed own­er­ship of the pro­gram and that it is de­ter­mined to ful­fill its re­quire­ments,” said the cen­tral banker.

Draghi added that another key el­e­ment over the com­ing months is the dis­cus­sion about Greek debt sus­tain­abil­ity. He said the ECB has al­ready ex­pressed con­cern about whether Greece’s debt is sus­tain­able. He sug­gested that an “el­e­ment” of debt re­lief would be needed.

On Fri­day, the head of the In­ter­na­tional Mon­e­tary Fund’s Euro­pean depart­ment, Poul Thom­sen, in­di­cated that the Washington-based or­ga­ni­za­tion would be seek­ing a sig­nif­i­cant re­duc­tion in Greece’s debt if it is to be part of the third pro­gram.

“We think that Greece can­not deal with its debt with­out debt re­lief,” Thom­sen said at an IMF meet­ing in Lima. “Greece can­not deal with debt just through re­forms and ad­just­ment.”

Euro­pean sources sug­gested to Kathimerini that any restruc­tur­ing of Greek debt would not be front-loaded but would be linked to the con­tin­ued mon­i­tor­ing of the Greek econ­omy be­yond the end of the cur­rent pro­gram, which runs un­til the sum­mer of 2018.

This re­flects fears in some euro-area coun­tries that if Greece is granted debt re­lief be­fore the pro­gram ends then its politi­cians will be­come less re­spon­si­ble once out­side mon­i­tor­ing also stops in three years.

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