Lew calls for debt relief, Thomsen questions fiscal targets

8 October 2016
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US Treasury Secretary Jack Lew on Friday pressed Greek Finance Minister Euclid Tsakalotos to push for a swift conclusion to Greece’s current bailout review so talks can be launched on finally relieving some of the country’s debt burden.

Lew made his comments during talks with Tsakalotos in Washington on Friday on the sidelines of an International Monetary Fund summit in the US capital.

Although Lew underlined the need for Greece’s debt to be restructured as soon as possible, he acknowledged that the final decision for this will be up to the country’s European creditors.

The sense in Washington is that there will be no major decisions until after general elections in Germany scheduled for the fall of 2017, Kathimerini understands.

During his talks with Tsakalotos, Lew emphasized the need for more progress with reforms, particularly in the area of privatizations, where there is a large untapped potential for revenue.

On Saturday Tsakalotos is to meet with International Monetary Fund Managing Director Christine Lagarde, when the intentions of the IMF as regards Greece’s third bailout are expected to dominate talks.

As the Fund’s insistence on debt relief for Greece has yet to be satisfied, the IMF is not expected to offer financial support.

On Thursday, the Fund’s European Department head Poul Thomsen told reporters he was unconvinced that Greek bailout reforms would produce the fiscal targets set by European creditors.

The IMF’s calculations show the reforms Greece has undertaken would produce a primary surplus of 1.5 percent of gross domestic product by 2018, far below the European forecast of 3.5 percent of GDP, he said.

“If Greece and its European partners want to agree on a program with a more ambitious fiscal target, we need to see how it adds up,” he said.

“We think that some of the fundamental reforms in the public sector have still not been undertaken,” he added.

On Monday, eurozone finance ministers are to assess whether Greece has made adequate reform progress to allow the release of a 2.8-billion-euro tranche in loans.

Foreign envoys are due to return to Athens on October 17 or 18 to launch the second review of Greece’s third bailout, which is expected to be tough.

The next round of talks will address the thorny issues of labor rights and bad loans.

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