Brussels (AFP) – Eurozone finance ministers said they hoped to unlock vital bailout cash for Greece Tuesday, but warned of tough talks on debt relief that the IMF has demanded as the price for staying with the programme.
The 19 ministers from the countries that use the euro met two days after Greek lawmakers passed yet another round of spending cuts and tax hikes demanded in return for rescue loans.
Greece is looking to unlock as much as 11 billion euros ($12 billion) at the Eurogroup talks by completing the first formal review its 86 billion euro bailout programme agreed last July.
Eurogroup head Jeroen Dijsselbloem hailed Greece’s “important work since the summer and in the past weeks” to deliver on the reforms.
“I hope there is full agreement … and that we can move on in the programme,” added Dijsselbloem, who is also Dutch finance minister, saying disbursement could be “in weeks”.
German Finance Minister Wolfgang Schaeuble agreed that he was “confident” for a deal in principle at Tuesday’s talks on the payout.
Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July, and has already fallen behind in paying for everyday government duties and wages.
But the hardest part of the talks will be the effort to diffuse the row between Greece’s creditors, the eurozone governments and the International Monetary Fund, over the state of the Greek economy and debt relief.
“It’s not an option to go on without the IMF,” Dijsselbloem said, signalling that Germany would be forced to compromise on the issue.
– ‘Spend the night together’ –
Germany, the eurozone’s economic powerhouse, is deeply opposed to alleviating any of Athens’ debt and claims it is not necessary for now.
But fortunately for Athens, Germany also firmly wants the pro-reform IMF to remain in the bailout and Berlin will have to cede ground on debt relief to achieve that.
“Without the IMF on board, there is no programme,” Schaeuble conceded, adding that “we have no quarrel with the IMF”.
Slovakian Finance Minister Peter Kazimir warned the meeting “is not going to be an easy one”.
“I’m afraid we will spend the night together,” he said, harking back to the long nights of talks that led up to last year’s bailout.
The IMF believes that Greek public debt at the current level of about 180 percent of gross domestic product is unsustainable and must be reduced.
The IMF darkly added in a report on Monday that without restructuring the debt load could soar to as much as 250 percent of output by 2060.
It also insisted that debt relief for Greece should be in some measure “upfront and unconditional”, catching many eurozone ministers off guard as they are wary of offering more favours to Athens.
“The IMF were talking about unconditional debt relief — that I found really very strange,” said Johan Van Overtveldt, Belgium’s finance minister.
The talks on Tuesday come after Greek lawmakers narrowly adopted another batch of controversial reform commitments.
The measures included the establishment of a new privatisation fund that will manage Greece’s public assets independently from state meddling.
“European leaders get the message that Greece is sticking to its promises. Now, it’s their turn,” Greek Prime Minister Alexis Tsipras told lawmakers.
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