International Monetary Fund chief Christine Lagarde and the eurozone’s 19 finance ministers are meeting with hopes riding high that the talks will secure the release of the latest segment of Greece’s 86 billion euro ($97 billion) bailout agreed in 2015. Greece has repayments on other loans due next month, which it could not otherwise have made.
“It’s a question of goodwill and it’s a question of willingness”, said French Finance Minister Bruno Le Maire, whose country has long taken a softer line on Greece than Germany.
Greece almost crashed out of the euro in 2015 after a furious fight over the bailout deal, and says its fragile recovery has suffered from the most recent delay.
Greece’s left-led coalition government has recently taken further cost-cutting measures, including trims to pensions, in hopes of getting a long-delayed rescue loan installment.
But the International Monetary Fund is less optimistic, arguing there must be further relief for Athens before it can label its debt sustainable and justify loaning Greece any more cash.
He said the best Greece could hope for is some sort of limited debt relief deal in 2018, which will likely be agonizing to extract from Europe but still won’t solve Athens’ woes.
Eurogroup finance ministers meet later on Thursday to review the bailout program for Greece.
The Greek people need to see the “light at the end of the tunnel of austerity”, Moscovici said.
Pressure is mounting at home on left-wing Greek Prime Minister Alexis Tsipras from a public tired of austerity.
The Fund could however join the program with a financial support “in the range of 2 billion dollars” only after a full deal on additional measures of debt relief for Greece.
Dijsselbloem said the creditors were “preparing Greece for the end of the program”, when Greece would have to stand on its own feet for the first time since 2010 and borrow money from worldwide bond markets.
Debt relief talk has been a hard sell in Germany, the biggest contributor to the Greek bailouts, which faces elections in September and does not want to anger its bailout-weary voters with discussions of relief for Athens.
For Greece, that would limit the amount it has to pay out on debt servicing each year, money it can use to help the Greek economy and society. That’s largely because the Greek economy has contracted by around a quarter, meaning a worsening in the debt load even at a time when the country’s budget has improved markedly.
The IMF has so far refused to join in this bailout, Greece’s third since 2010, because it believes that without relief Greece can not get out from under its massive debt mountain.
The IMF compromise is a setback for Tsipras, who loses a major backer of deeper debt relief.
“I would like to announce my intention to propose to the IMF’s Executive Board the approval in principle (AIP) of a new IMF Stand-By Arrangement for Greece”.
In Athens, some 1,500 pensioners gathered to protest against more than a dozen rounds of pension cuts since bailout-induced austerity was enforced seven years ago.
“We can’t live on 300 euros” they chanted.