Thursday

1st Jun 2023

Doubts emerge on IMF participation in Greek bailout

  • IMF chief Christine Lagarde - Her institution is sceptical about a third bailout for Greece without debt relief (Photo: Consillium)

The IMF has indicated it will not take part in a third bailout for Greece unless a deal is reached on making Athens' debt sustainable, a move that underlines the difficulty of reaching an overall agreement by next month's deadline.

"The IMF can only support a programme that is comprehensive," an IMF official told journalists on Wednesday reports Reuters.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The official also said there was "no expectation" that talks over the coming weeks will reach the stage that allow the IMF to approve a new programme.

Meanwhile the FT reported that an IMF board meeting on Wednesday concluded Athens' high debt and poor level of implementing reforms means it is not eligible for a loan.

The conclusion means that while the Washington-based Fund will take part in bailout negotiations - which started earlier this week in Athens - it will potentially not decide whether to agree to the programme for several months.

A summary of Wednesday's board meeting, seen by the FT, says the IMF will only take part once eurozone lenders have "agreed on debt relief".

Greece and its creditors have just three weeks to reach a deal on the terms and conditions of an €86bn bailout after a preliminary go-ahead for a third loan was agreed at a fractious summit earlier this month.

The enforced deadline is 20 August when Greece is due to pay €3.2bn to the European Central Bank (ECB). If no deal is reached by then, Greece might have to seek a second bridge-loan to make the payment. That would follow a €7bn bridge-loan the country already had to take earlier in July to pay debts to the ECB and IMF.

The IMF's reluctance over Greece emphasizes the difficulty of the eurozone situation.

Germany, as Greece's largest eurozone creditor, is strongly opposed to writing down Greece's debt. It has also indicated that it would be difficult to get parliamentary approval for any final deal if the IMF is not onboard.

Meanwhile if Germany is sceptical that Greece will follow through on all the conditions necessary just to open bailout talks and the raft of measures that will be attached to the actual bailout, the Greek government is just as sceptical about having to push through more austerity measures.

Greek PM Alexis Tsipras, following the July Summit, admitted he signed a deal that he did not believe in. Since then he has been struggling to contain the discontent in his left-wing Syriza party.

In a defiant address on Wednesday, he told the party: “Leaving the euro without any possibility of economic support, and without foreign exchange reserves, would mean a huge devaluation, harsh austerity and further recourse to the International Monetary Fund for support."

“Anyone who doesn’t accept this is either wilfully blind or is hiding the truth," he added.

Earlier he had mooted an internal party referendum on Sunday but this was rejected by the committee on grounds that it would derail bailout talks.

The party's committee eventually decided to hold a congress in September to determine government policy - a move that could then lead to snap elections in the country.

Greece embroiled in bailout row with IMF

The Greek government accuses the International Monetary Fund of wanting to push the country to the brink of default after WikiLeaks revelations. The IMF rejects "threats".

EU: national energy price-spike measures should end this year

"If energy prices increase again and support cannot be fully discontinued, targeted policies to support vulnerable households and companies — rather than wide and less effective support policies — will remain crucial," the commission said in its assessment.

Opinion

EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.

Latest News

  1. Europe's TV union wooing Lavrov for splashy interview
  2. ECB: eurozone home prices could see 'disorderly' fall
  3. Adapting to Southern Europe's 'new normal' — from droughts to floods
  4. Want to stop forced migration from West Africa? Start by banning bottom trawling
  5. Germany unsure if Orbán fit to be 'EU president'
  6. EU Parliament chief given report on MEP abuse 30 weeks before sanction
  7. EU clashes over protection of workers exposed to asbestos
  8. EU to blacklist nine Russians over jailing of dissident

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us