Thursday, June 22, 2017

Greek bailout impasse needs more talks, eurozone chief warns

By on February 14, 2017

Farmers hold flags of Larissa farmer's union during a protest in Athens, Tuesday, Feb. 14, 2017. Farming unions are angry at increases in their taxation and pension contributions, as part of Greece's bailout obligations. The banner in the background reads in Greek "Immediate satisfaction of demands of farmers". (AP Photo/Yorgos Karahalis)

Farmers hold flags of Larissa farmer’s union during a protest in Athens, Tuesday, Feb. 14, 2017. Farming unions are angry at increases in their taxation and pension contributions, as part of Greece’s bailout obligations. The banner in the background reads in Greek “Immediate satisfaction of demands of farmers”. (AP Photo/Yorgos Karahalis)

BRUSSELS – The eurozone’s top official said Tuesday that next week’s meeting between Greece and its international creditors will not yet provide a full breakthrough on the country’s bailout program because more negotiations on reforms are needed.

“It really will take more time,” said Jeroen Dijsselbloem, the Dutchman who chairs the regular gathering of eurozone finance ministers, known as the eurogroup.

“People are thinking that because we have a eurogroup next week, that we have to have a solution next week, but it has never been part of my plans,” he told the Dutch RTL Z network.

Greece’s creditors, including the eurozone countries and the International Monetary Fund, want Greece to commit to more budget savings in exchange for paying out more loans.

But after years of grinding austerity imposed as a condition of the bailout programs, the Greek government does not want any more stringent reforms. Especially as its economy is finally picking up.

To underscore Greek popular resentment of the budget cuts and tax increases, farmers held a rally in front of Greece’s parliament where they handed out cabbages. Farmers elsewhere in the country maintained highway blockades with tractors.

The talks on Greece’s bailout are complicated by the fact that the eurozone creditors and the IMF do not see eye to eye on how to help the country.

The IMF has taken a dimmer view of Greece’s economic prospects and says that the eurozone states should ideally write off some of the loans they gave the country. Otherwise, Greece’s debt will be unsustainable, it says.

The eurozone states, many of which are hesitant to admit to their voters that the money they gave Greece will not come back, are more optimistic about Greece’s prospects and say it can make do by sticking to economic reforms.

The disagreement is important because the latest bailout for Greece had been negotiated on the assumption that the IMF would pitch in eventually. Without a deal, the IMF could walk away – meaning the bailout could have to be renegotiated and Greece would have to wait longer to get rescue cash. Greece faces debt repayments of 7 billion euros in July.

EU Commission Vice President Valdis Dombrovskis acknowledged that “the IMF is having more cautious fiscal forecasts” but said both sides were seeking to bridge the gap.

Dijsselbloem badly wants the IMF on board.

“The eurogroup attaches importance to the approval of the IMF, also for the next steps. That is my priority. And if we get it, I know for sure that in the Netherlands, Germany, there will be enough support,” he said.

Dijsselbloem insisted that the financial situation in Greece is currently not comparable to 2015, when the nation was teetering on the brink of being kicked out of the eurozone and only stayed after committing to another series of austerity reforms.

The economy grew for four consecutive quarters, though it shrank slightly, by 0.4 percent, in the last three months of 2016, according to new figures released Tuesday.

There are fears that upcoming elections in the Netherlands and France could make any progress on Greece’s situation difficult in coming months.

Dijsselbloem said eurozone and IMF officials still have to go back to Athens to complete talks on further reforms that are aimed at keeping Greek from backsliding on its fiscal commitments. Those decisions would then still need to be approved by the Greek parliament before they can be cleared by the eurogroup.

That would only leave agreement on a broad political outline as the maximum achievable result for Monday’s eurozone meeting.

image_print

You must be logged in to post a comment Login

Start your Free Trial for a limited time!