Alex Pigman –
Under pressure from the IMF, euro zone finance ministers will consider major debt relief and fresh aid for Greece on Monday despite the deep reservations of bailout-weary Germany.
Ministers from the 19-member single currency bloc must confront the sensitive topic at talks in Brussels after Greek lawmakers fulfilled the euro zone’s latest demands for painful reforms in a vote last Thursday.
The vote in parliament, which was met by angry protests, satisfied the conditions of Greece’s bailout and opened the way for debt relief as well as fresh loans so that Athens can repay a debt of 7 billion euros ($7.8 billion) in July.
“Our country… has fulfilled its obligations totally and on time,” Greek Finance Minister Euclid Tsakalotos said on Sunday ahead of the crunch talks.
“There is no excuse for further delay on the issue of the debt relief,” he said.
Greece’s debt stands at a towering 180 per cent of annual output, the legacy of the Greek debt crisis that brought panic to the markets and nearly forced the country out of the euro zone.
But several euro zone governments have dragged their heels on tackling the debt mountain over the long term, insisting on more reforms before doing Athens further favours.
The issue is particularly sensitive in Germany, where more debt relief for Greece is seen as a vote loser in the run-up to general elections in September.
Opposing Berlin is the International Monetary Fund, which has made more debt relief a condition of taking part in Greece’s latest 86-billion-euro ($94-billion) bailout, its third since 2010.
“We have to find a scenario on debt that holds for years to come and that everyone can accept, including the IMF,” an EU diplomat said on condition of anonymity.
The discussion will be “rather difficult and long,” the diplomat said.
Led by the tough negotiator Christine Lagarde, the IMF says Greece’s debt is unsustainable and will be “explosive” in the long run, requiring a more ambitious plan from Europe.
This would include dramatically extending grace periods and maturities on the loans far beyond what the euro zone has committed to so far.
The question has served as a point of contention for months between the IMF and the euro zone’s most influential official, German Finance Minister Wolfgang Schaeuble.
Schaeuble opposes debt relief, but at the same time refuses to unlock more loans to Greece without the partnership of the IMF, which he sees as a guarantor of financial rigour.
“I think that we are in reality very close to an overall deal for Greece (that includes the debt question),” the EU’s Economic Affairs Commissioner Pierre Moscovici told French public radio on Sunday.
“I really mean it, and if not, then it will be in the coming weeks,” he said.
The meeting will be the first for French Finance Minister Bruno Le Maire, named to his post last week by newly-elected President Emmanuel Macron, a pro-EU centrist.
Le Maire will attend the Brussels talks after a morning stop in Berlin to meet Schaeuble.
Germany and France are Greece’s biggest lenders.
Greek Prime Minister Alexis Tsipras earlier this month grudgingly accepted the need to legislate spending cuts and weakened tax breaks to unlock the cash and win debt relief.
The vote was greeted by a heated protest of 10,000 people outside parliament, with many Greeks fed up with yet another round of austerity to meet demands of the country’s euro zone partners.— AFP