Euro chiefs claim progress on Greece, seek to persuade ECB
Euro-area finance ministers will push the International Monetary Fund and central bankers to endorse new plans to save Greece from the fiscal abyss, seeking to overcome the latest impasse in the debt crisis and restart aid payments to Athens.
Finance chiefs will brief the IMF and European Central Bank on “further concessions” that would plug Greece’s deficit gap without forcing a writeoff of official loans, Austria’s Maria Fekter said today before the ministers’ fourth round of talks on the Greek crisis in two weeks.
IMF criticism of Europe’s failure to put Greece’s debt on a “sustainable” path has held up an accord on an updated financing package, narrowing the options for patching up the debtstricken country drawing on 240 billion euros ($ 311 billion) in official loans awarded since 2010.
A deal is “practically finalized, there are just a few centimeters to go,” French Finance Minister Pierre Moscovici said. “Consensus is within reach if we are capable of seizing it. If everyone is reasonable, we can do it quite quickly.” IMF criticism of Europe’s failure to put Greece’s debt on a “sustainable” path has held up an accord on an updated financing package, narrow- ing the options for patching up the debtstricken country drawing on 240 billion euros ($311 billion) in official loans pledged since 2010.
“We’re going to try to work for a solution that is credible for Greece,” IMF Managing Director Christine Lagarde said as she entered the meeting. A solution is hung up on politics in Germany, the dominant country in Europe’s crisis management, where Chancellor Angela Merkel is campaigning for a third term next year on the pledge that Greece won’t cost taxpayers an additional cent. On the way in to today’s meeting, German Finance Minister Wolfgang Schaeuble dismissed warnings by the IMF and some ECB officials that forgiveness of part of the official debt is the only way out for Greece. Finland and the Netherlands, also with top credit ratings, balk at debt relief as well.
“It’s nonsense to create a typical German problem out of it,” Schaeuble said. “It’s a problem of the euro area that everyone says that the construction that was created for the European rescue umbrellas is not compatible with a debt cut. The ECB has been saying exactly the same.”
Finance ministers are dealing with the consequences of a Nov. 12 decision to give Greece two extra years, until 2016, to cut its budget deficit, an admission that the austerity-first prescription for solving the crisis is strangling its economy. At an overnight session lasting more than 11 hours a week later, the ministers failed to fill the resulting financing gap or show that Greek debt would drop to a target of 120 percent of gross domestic product by 2020, a condition set by the IMF. They consulted again on Nov. 24 by teleconference. “I want to encourage all the euro- area member states and the IMF to go the last mile in order to find an agreement, in fact go the last centimeter because we’re so close to an agreement,” European Union Economic and Monetary Commissioner Olli Rehn said.
Greek debt is set to peak at 190 percent of GDP in 2014. An option under consideration last week was to raise the debt target to 124 percent of GDP in 2020, a Greek official said on Nov. 22. A deal would pave the way for a payout of at least 31 billion euros that Greece has been waiting for since June.
“It wouldn’t be a good solution for Europe if we didn’t have the rest of the world on board, including the IMF,” Luxembourg Finance Minister Luc Frieden said.