The International Monetary Fund, a key creditor in Greece’s bailout, will not participate in any further rescues of the debt-wracked country, Germany’s finance minister told a Greek newspaper today. “We have all acknowledged (eurozone and IMF) that the third Greek (bailout) payment will be the last with the participation of the IMF,” Wolfgang Schaeuble told Greek daily Ta Nea.
The German finance chief has been inflexible on the issue of Greek debt relief, in opposition to the IMF which says it needs to be done to breathe new life into Greece’s floundering economy. Agreement was reached last month to pay the third tranche of Greece’s 86-billion euro (USD 97-billion) bailout, after being held up for months by a row over its need for debt relief which has pitted bailout-weary Germany against the IMF.
After participating in two previous international loans to save Greece from bankruptcy, the IMF is still set to take part in a third bailout. But for the moment, it has held back its contribution over the issue of whether the eurozone will decide to ease Greek debt — currently at 180 per cent of gross domestic product (GDP). Since 2010, the international bailouts accompanied by tough austerity measures “have obtained some results but have not resolved the problem,” said Schaeuble, who hopes a solution can be reached by the end of the current programme in 2018.
Under pressure especially from Berlin, Greece’s 18 other euro partners have not yet broached the issue of debt relief, preferring to push that hot-button topic to next year. But IMF chief Christine Lagarde has warned that Greece’s debt is not sustainable and that the country requires significant debt relief from Europe. In the interview, Schaeuble pointed to the European Stability Mechanism (ESM), a bailout fund for eurozone countries, as a way to respond to the future needs of countries sharing the single currency.
Meanwhile, in another Greek newspaper, ESM chief Klaus Regling appeared to share that view, saying there is “a discussion in Europe on reinforcing the monetary union.” Speaking to the Efimerida ton syntakton (Journal of Editors), Regling said the eurozone had to become “less vulnerable” and that he was certain that “the ESM will play a very important role” if a new financial crisis arises.
“We can assume some of the responsibilities the IMF has undertaken over these past few years and I think there is a wide consensus for that in the future,” he said. “If the reforms continue over the next 14 months, Greece will be able to return to the international markets,” he added.