Bid to restart bailout talks as QE, IMF fate un­clear

Kathimerini English - - Front Page -

With a meet­ing of eu­ro­zone Fi­nance Min­istry of­fi­cials sched­uled for Thurs­day, Greek and Euro­pean of­fi­cials aim to un­freeze stalled bailout ne­go­ti­a­tions even though key de­ci­sions vis-a-vis Greece’s in­clu­sion in the Euro­pean Cen­tral Bank’s quan­ti­ta­tive eas­ing pro­gram and the In­ter­na­tional Mone­tary Fund’s par­tic­i­pa­tion in Greece’s third bailout ap­pear far from im­mi­nent.

The goal of Thurs­day’s Euro Work­ing Group is to as­sess the progress achieved by Greek au­thor­i­ties in im­ple­ment­ing eco­nomic re­forms and to de­ter­mine when rep­re­sen­ta­tives of the coun­try’s cred­i­tors can re­turn to Athens to re­sume talks. Some of­fi­cials in Brus­sels, how­ever, reckon that not enough progress will have been achieved by the end of this month to war­rant the re­turn to Athens of for­eign au­di­tors.

Apart from Greece’s slow progress in im­ple­ment­ing agreed-to re­forms, an­other key prob­lem is a rift be­tween Euro­pean of­fi­cials on the one hand and the IMF on the other re­gard­ing the ex­tent of aus­ter­ity that should be im­posed in Greece and the type and tim­ing of debt relief that should be of­fered.

EU and IMF of­fi­cials con­tinue to dis­agree on the fis­cal out­look for Greece over the next three years. Also the Washington-based Fund wants Athens to re­duce the tax-free thresh­old, ar­gu­ing that the tax base is too nar­row while push­ing for fur­ther re­form of the dys­func­tional pen­sion sys­tem.

Mean­while sources at the ECB have in­di­cated that the win­dow for Greece’s po­ten­tial in­clu­sion in the bank’s QE scheme is dis­ap­pear­ing as bailout talks re­main stalled and at­ten­tion will soon shift from Greece to the Nether­lands, which is hold­ing gen­eral elec­tions on March 15.

Prime Min­is­ter Alexis Tsipras has in­sisted that bailout talks are set to re­sume and that Greece has both QE and debt relief to look for­ward to. But if that nar­ra­tive starts un­rav­el­ing, the prospect of snap polls will loom large again. Al­though gov­ern­ment of­fi­cials have re­buffed re­ports that plans are afoot for early elec­tions, Tsipras’s re­cent hand­outs to pen­sion­ers and vis­its across the coun­try in­di­cate that he has do­mes­tic pol­i­tics in mind.

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