The leftist Greek government’s designs for short-term debt relief in the coming months has reportedly run into a stern “nein” by the German side, according to reports out of a late Tuesday evening working dinner by the Euro Working Group in Brussels.
By T. Tsiros
The leftist Greek government’s designs for short-term debt relief in the coming months has reportedly run into a stern “nein” by the German side, according to reports out of a late Tuesday evening working dinner by the Euro Working Group in Brussels.
The Greek government’s standing demand for specific short-term measures by the end of the year, at the very least, reportedly stumbled onto the German delegations’ opposition. Conversely, the issue was viewed in a positive light by representatives of the European Stability Mechanism.
German national elections in 2017 were one of the reasons cited for the opposition, along with Berlin’s leitmotif of “measures are not now necessary”.
The embattled Tsipras government has eagerly pressed for any semblance of debt relief in order to allay growing criticism in the country from its heavy reliance on higher direct and indirect taxes – along with cuts in supplementary pensions – in order to meet fiscal targets through 2018 – one of the highlights in the bailout (memorandum) signed last summer.
The “road map”, as far as Athens was concerned, meant passing nearly a score of “prior actions” next month in order to achieve a second review of the Greek program and to free up a 2.8-billion-euro sub-tranche of bailout loan money.
The lack of German -- and by extension Euro area -- support for short-term debt relief, nevertheless, again raises the specter of the IMF abandoning the Greek program.
The Washington-based Fund’s leadership has repeatedly called for details of a May 24 Eurogroup agreement to be spelled out regarding Greek debt relief, so that a debt sustainability study can be concluded. The study’s results will influence the IMF’s final decision over whether to remain in the Greek program.