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19th Sep 2020

G8: Greece must do more to sort out debt problems

The Group of Eight leading industrial economies has warned Greece to do more to resolve its current debt issues.

Meeting in Deauville, France, on Thursday (26 May) the leaders of the G8 countries put the Greek situation and the eurozone crisis under the microscope, according to the Japanese delegation, worried that the ongoing problems in Europe are hitting the world's economic recovery.

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  • G8 leaders arrive in Deauville: The euro crisis is one of the main topics at the G8 meeting (Photo: g20-g8.com)

"Many leaders pointed out that Europe's debt problem, the price hikes of oil, food and commodities, and the overheating of emerging economies are among factors that put downwards pressure on the global economy," said Japanese deputy chief cabinet secretary, Tetsuro Fukuyama, briefing journalists on the state of discussions.

"Especially on Greece's debt problem, many leaders expressed the view that it is important that Greece further works on its fiscal reform and it should work with the IMF on this issue," he said.

American delegates reportedly demanded a discussion of the weak standing of the euro and how this could hurt US exports. One of the brightest spots in the American recovery is a return to growth in its manufacturing sector largely on the back of a weaker dollar. A sliding euro could undermine this success.

Speaking to reporters at the meeting, EU Council President Herman van Rompuy said that Europe would "not let the euro fall".

"Regarding a possible restructuring of the Greek debt, we will do our utmost not to face a default, not to face a credit event," he said. "We will do everything we can to maintain financial stability of Eurozone."

"We trust Greece will take all necessary measures and all necessary reforms to reach the fiscal goals that have been decided upon," he continued.

He also said that the EU countries in the G8, Britain, France, Italy and Germany, were not there to "negotiate" with the US over a second Greek bail-out.

Without Washington's support, the IMF could not involve itself in a second rescue of Greece, a position that may be in doubt.

Already on Thursday, the chair of the eurogroup of nations, Jean-Claude Juncker, hinted that Greece may not see delivery of its latest tranche of bail-out cash if the latest review by inspectors of its budgeting does not deliver a passing grade.

"I'm not the spokesman of the International Monetary Fund, but the rules say they can only disburse if there is a financing guarantee for the 12-month period," he said, speaking in Luxembourg.

He added that he feared Greece may not ace this test.

"I don't think that the troika [inspectors from the EU, ECB and IMF] will come to the conclusion that this is given," he said.

He added that the EU would not be able to pick up the slack should the IMF not sign off.

"The expectation of the IMF is that the Europeans would step in for the IMF and take upon themselves the IMF's portion of the financing ... That won't work. We are looking very carefully at what the IMF does, and if they don't say a new tranche in loans should go the Greeks, then we won't either."

The EU members of the G8 are expected to issue a statement in Deauville commiting themselves to resolving the eurozone crisis.

Opinion

A G8 meeting that goes back to first principles

There will be no lengthy communiqué and no armies of officials at the G8 meeting next summer. Instead there will one table with G8 leaders holding each other to account, writes David Cameron.

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