An agreement needs to be reached quickly between the International Monetary Fund (IMF) and the Greek government and the creditors of the country in Europe so that there is enough time at hand with the Fund to be able to disburse money to Greece in time.
Despite Greece requesting a debt relief – essentially changes in debt repayment to suit it, since 2015, the issue has not been settled yet because a number of EU countries are opposed to the proposal. There are some EU countries, including some of the largest creditors of Greece, who do not want any significant debt relaxation for Greece because they do not want themselves to be perceived by their citizens as governments that are participants to what is believed by many to be malpractices by Greece.,
There is urgent need for an agreement at a meeting late next week, Poul Thomsen, the IMF director for Europe, told the media.
“We really need an agreement at the Eurogroup next week,” Thomsen said.
“Time is running out,” he said, “but if there is an agreement in the Eurogroup meeting in May, then there will be enough time for us to activate the program and for it to coincide with the remainder of the ESM (European Stability Mechanism) program.”
While ESM is the agency of the EU dealing with agreement and bailouts of member countries in need for funding, the Eurogroup is referred to the regular meeting that is held between all of the finance ministers from those member states that have the same currency – Euro.
Europe has accounted for all of the finance that Greece has received so far in its third bailout program. The debt-ridden economy is still awaiting some help from the U.S based IMF. Until such time that the European creditors agree on specific conditions that would make the Greek debt more sustainable over the long term, no funds would be disbursed by it, the IMF has said. A debt-to-GDP (gross domestic product) of 180 percent exists for Greece currently.
And since Greece is closing in on the end of the financial program on August 20, the issue of the debt has assumed greater importance.
The IMF can disburse 1.6 billion euros ($1.9 billion in funds to Greece if an agreement is reached soon and before the end of the bailout program.
“The aim is to reach a staff level agreement ahead of the May Eurogroup”, said Top of FormBottom of Form
Eurogroup President Mario Centeno in a letter to the other finance ministers.
Still to enable an agreement to be reached by next Thursday, there are more issues that need to be settled first.
“There’s been a considerable narrowing of differences in recent months,” Thomsen said, but “there are still some different assessments of growth over the medium term,” he added.
“Acknowledging that this is an area where there is considerable uncertainty, we are discussing a mechanism for providing more debt relief in case growth is weaker than what our European partners expect,” he said.
(Adapted from CNBC.com)