Cred­i­tors in­sist on mea­sures

Just a day af­ter prime min­is­ter de­clines to leg­is­late more aus­ter­ity, Brus­sels sides with IMF de­mands

Kathimerini English - - Front Page -

Eu­ro­zone fi­nance min­is­ters turned the heat up on Athens yes­ter­day, de­mand­ing that it leg­is­lates mea­sures now for the pe­riod af­ter 2018, when the coun­try’s bailout ends, dash­ing the gov­ern­ment’s hopes of a swift con­clu­sion to the sec­ond re­view of its third bailout.

The Eurogroup in Brus­sels, which the gov­ern­ment hoped would pave the way for the re­turn to Athens of the rep­re­sen­ta­tives of the coun­try’s quar­tet of cred­i­tors to con­tinue talks, was held just two days af­ter the em­phatic re­fusal by Prime Min­is­ter Alexis Tsipras to en­act any fur­ther mea­sures now. Fi­nance Min­is­ter Eu­clid Tsakalo­tos said the de­mands by the International Mon­e­tary Fund went “well be­yond the Euro­pean frame­work of democ­racy.”

“It’s not cor­rect to ask a coun­try in a pro­gram to leg­is­late two to three years be­fore­hand what it will do in 2019,” he said af­ter the Eurogroup.

More­over, what is wor­ri­some for the left­ist-led gov­ern­ment is that Greece ap­pears to have lost the sup­port of the Euro­pean Com­mis­sion, which aligned it­self with the de­mands made by the IMF and Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble for Athens to leg­is­late mea­sures now for the pe­riod af­ter 2018.

How­ever, Eurogroup chief Jeroen Di­js­sel­bloem said that com­plet­ing the re­view is “in ev­ery­body’s in­ter­est,” adding that Greece’s cred­i­tors re­main com­mit­ted to con­tin­u­ing talks, and that eu­ro­zone fi­nance min­is­ters want to ex­pe­dite pro­ce­dures that will al­low cred­i­tor rep­re­sen­ta­tives to re­turn to Athens “as quick as pos­si­ble.” The good news, he said, was that the Greek econ­omy is re­cov­er­ing fis­cally, and that state rev­enues were higher than ex­pected. Greece and the in­sti­tu­tions, he added, are com­mit­ted to reach­ing a staff-level agree­ment.

Be­fore the meet­ing, Di­js­sel­bloem dis­missed spec­u­la­tion that the IMF will no longer be in­volved in the Greek bailout, say­ing that it plans to be a full par­tic­i­pant.

The IMF has in­sisted that Greece will never achieve its fis­cal tar­gets un­der cur­rent bud­get plans with­out sub­stan­tial debt re­lief. Ac­cord­ing to an IMF re­port – seen by Kathimerini – which will be pre­sented to the Washington-based or­ga­ni­za­tion’s ex­ec­u­tive board on Fe­bru­ary 6, Greece’s debt will re­main highly un­sus­tain­able, even if the short-term debt re­lief mea­sures de­cided by the Eurogroup last De­cem­ber are fac­tored in. The IMF’s analysis is based on lower growth fore­casts – around half a point be­low pro­jec­tions of Euro­pean in­sti­tu­tions – and a pri­mary sur­plus of 1.5 of GDP af­ter 2018. The IMF has stressed the need for sig­nif­i­cantly larger debt re­lief, through a longer grace pe­riod al­low­ing for de­lays in in­ter­est pay­ments un­til 2040, the ex­ten­sion of Euro­pean loan ma­tu­ri­ties un­til 2070 and the re­duc­tion in­ter­est on EFSF and ESM loans be­low 1.5 per­cent for a 30year pe­riod.

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