Creditors insist on measures

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

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.