By Dimitris Hatzinikolas
The now pressing issue of the Greek program will be decided at next weekend’s annual IMF spring meeting in Washington, regardless of whether Athens and creditors agree on two texts by Tuesday that delineate differences between European institutions and the Fund, or between the IMF and the Greek government.
According to reports, a political decision on the sidelines of the IMF meetings at the highest level – Lagarde, Thomsen, Schauble, Sapen, Draghi and Dijsselbloem– will determine whether the first review of the Greek program is achieved this.
Beyond pacifying statements by Greek government ministers and sources over recent period – officially and unofficially – Athens and creditors still disagree over the issue of NPLs, cuts in supplementary pensions and the level of fiscal adjustments, among others.
A political decision in Washington would either hand Athens the first review of the Greek program (third bailout) and a timeframe for the next loan tranche, or, allow negotiations to drag on, possibly until July.
The latter prospect would inevitably lead to deteriorating finances as state coffers dry out, reminiscent of the situation last July. At the time, an impasse in negotiations led to an abrupt July 5 referendum on creditors’ terms, followed by a convincing “No” in the poll and an eventual back down by the Tsipras government, all of which resulted in a third memorandum voted through the Greek Parliament in August 2015.
As previously reported by “N”, creditors are adamant over demands for guaranteed revenue-generating measures, cuts in social security spending and the commencement of steps to manage the “Olympus-sized” mountain (more than 100 billion euros) of non-performing loans (NPLs) held by systemic banks in the country.
By “managing”, creditors mean allowing foreign funds to purchase NPLs in the secondary market and manage mixed portfolios of “bad loans” and performing loans.
A “success story” scenario for the leftist government would be to conclude the first review this month and open debt talks in the summer.
