IMF eyes short-term mea­sures

Fund links par­tic­i­pa­tion in Greek pro­gram to re­form im­ple­men­ta­tion, point­ing to a pos­si­ble new agree­ment

Kathimerini English - - Focus -

The In­ter­na­tion­alMone­tary Fund yes­ter­day linked the sub­ject of debt-eas­ing mea­sures to the im­ple­men­ta­tion of re­forms in Greece, while cen­tral banker Yan­nis Stournaras stated that the coun­try will need more than just short-term debt light­en­ing mea­sures to be al­lowed into the quan­ti­ta­tive eas­ing pro­gram (QE).

IMF spokesman Gerry Rice said the Fund wel­comes the euro­zone’s in­ten­tion to dis­cuss the mea­sures at the next Eurogroup meet­ing on De- cem­ber 5, adding that for the IMF to as­sess those mea­sures and their im­pact on the Greek debt, they do not have to be im­ple­mented in ad­vance.

Rice added that the mea­sures can be ap­plied depend­ing on the progress Greece makes in its re­forms pro­gram – which means the coun­try may face yet an­other bailout agree­ment. He made it clear though that for the IMF to reach a de­ci­sion on its par­tic­i­pa­tion in the Greek pro­gram, it will need to know the breadth and form of those mea­sures.

The Fund’s spokesman re­it­er­ated that the mea­sures in the ex­ist­ing pro­gram are com­pat­i­ble with the IMF’s de­mand for a pri­mary sur­plus tar­get of 1.5 per­cent of Greek gross do­mes­tic prod­uct, so ad­di­tional mea­sures should not be re­quired.

But even if the IMF is con­vinced by the mea­sures the euro­zone dis­cusses next month, the Euro­pean Cen­tral Bank will need some­thing more sub­stan­tial be­fore it ush­ers Greece into its bond-buy­ing pro­gram, Stournaras – also an ECB coun­cil mem­ber – told Reuters yes­ter­day.

The gov­er­nor of the Bank of Greece ex­plained that “QE de­pends on debt be­ing sus­tain­able. The ECB needs to have some­thing con­crete on debt mea­sures be­fore it per­forms its own debt sus­tain­abil­ity anal­y­sis.” A serious dis­cus­sion on debt light­en­ing, with­out which Greece can­not hope for QE in­clu­sion, is not re­stricted to the short-term mea­sures, 1.0895 added Stournaras. Be­sides the short­term mea­sures, the euro­zone must also de­cide on medium-term ones (ie those to ap­ply after 2018), he ar­gued, as this is the only way the ECB can pro­ceed with its own Greek debt sus­tain­abil­ity anal­y­sis.

QE in­clu­sion, Stournaras stressed, will have “sec­ondary ef­fects, which are con­fi­dence and sym­bol­ism, and are more im­por­tant than the buy­ing it­self. It’s a passport for us to en­ter mar­kets again.”

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