IMF: No IMF Cash Now for Greece in Absence of Debt Relief
May 25 2016 - 12:50PM
Dow Jones News
WASHINGTON—A senior International Monetary Fund official
Wednesday said it can't help Europe with fresh emergency financing
for Greece because Athens's creditors haven't yet committed to
detailed debt relief.
The comments show that the agreement touted by European finance
ministers last night to release fresh bailout cash for Greece
hasn't nailed down the key elements the IMF says are critical to
finally return the debt-laden country to health. Rather, the IMF's
reserved support for the deal has paved the way for Germany to
approve new funds and sets the stage for more tough negotiations
later this year.
"Fundamentally, we need to be assured that the universe of
measures that Europe will to commit to…is consistent with what we
think is needed to reduce debt," the senior official told reporters
on a conference call. "We do not yet have that."
But the official said Europe's acknowledgment that debt relief
is needed and would be detailed later this year was enough to win
the fund's conditional backing.
"All the stakeholders now recognize that Greek debt is…highly
unsustainable," the official said. "They accept that debt relief is
needed, they accept the methodology that is needed to calibrate the
necessary debt relief. They accept the objectives of gross
financing needs in the near term and in the long run. They even
accept the time tables."
Many outside economists see the deal as papering over the
differences and once again prolonging the crisis.
"Summary of Eurogroup: Germany always wins, IMF caves under
pressure from Germany and U.S., no one does what's in Greece's best
interests," said Megan Greene, chief economist at Manulife and John
Hancock Asset Management, in a tweet.
Marc Chandler, global head of currency strategy at investment
bank Brown Brothers Harriman, called the deal a "paper charade"
that saves Europe more than it does Greece.
The IMF and its largest shareholders, Europe and the U.S., were
concerned that failure to reach a Greek deal could give proponents
of a U.K. exit from the European Union leverage ahead of a
referendum next week.
"It chose to capitulate now and fight later," Mr. Chandler said.
"Its capitulation was to sign off on the agreement even though the
debt relief that it had insisted on as a precondition is a little
more than vague suggestions until the end of the current
program."
Write to Ian Talley at ian.talley@wsj.com
(END) Dow Jones Newswires
May 25, 2016 12:35 ET (16:35 GMT)
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