Greek debt relief deal remains elusive
The Greek government is preparing to table a draft bill in parliament containing legislation delivering the prior actions needed to complete the fourth and final review of the county’s bailout program.
To this end, senior cabinet members, including Finance Minister Euclid Tsakalotos, will brief SYRIZA MPs during a parliamentary group session on Tuesday on what the draft legislation – which has not yet been finalized – contains.
SYRIZA MPs will also be briefed on the development of latest talks between the Greek government and international creditors.
Washington Group talks on the sidelines of a G7 meeting on Saturday did not result in an agreement on Greek debt relief, meaning negotiations will have to continue until 21 June. As things stand, failure to agree on a specific plan to reduce Greek debt will mean the International Monetary Fund will not activate a Stand-By Arrangement to participate in the Greek bailout.
IMF Managing Director Christine Lagarde, European Commission VP Valdis Dombrovskis, European Stability Mechanism chief Klaus Regling, European Central Bank president Mario Draghi and the Finance Ministers of Germany and France discussed possible debt relief scenarios, but fell short of agreeing on a way forward during their talks on Saturday.
“We continue to work with the IMF, there are meetings scheduled on our way to June 21st and everyone must be reassured that the decision (on debt relief) will provide Greece with market access … from the 20th of August,” Eurogroup president Mario Centeno told Reuters on Saturday.
Analysts believe it is now increasingly likely that the IMF will maintain the role of technical adviser in Greece’s bailout program, without putting up funds. The Fund is expected to present a debt sustainability analysis by 21 June.
“The Fund probably does not have enough time to activate its program and therefore, unless there is some development in the coming days, the program will not be activated,” Greece’s representative in the IMF, Michalis Psalidopoulos, told the Athens News Agency in an interview over the weekend.
Mario Centeno, meanwhile, said “I think people will be able to read the final package that will be agreed upon and the IMF is going to be involved in the future no matter what because of the huge financial engagement that the IMF has in Greece already.”
So far, the IMF and Greece’s European lenders appear to have agreed there will be no “haircut” of Greek debt. Germany and several other northern European countries are keen to ensure any prospective debt relief is tied to strict conditionality, while the IMF is pushing for automatic prolongation of loans maturity.
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