A three-way “tug-of-war” over the simmering issue of debt relief for Greece appears headed to the upcoming IMF spring meeting in Washington, with Athens eagerly pusshing for a start of talks, European creditors mostly insisting that the issue is not pressing and the IMF demanding a “haircut” in order to make the debt load sustainable, a condition in the Fund’s charter for continuing to lend to a country.
Without an agreement with the “quartet” of institutional creditors this week to achieve a first review of the Greek program (third bailout), the leftist Greek government will be hard pressed to demand a start to debt relief negotiations, as talks with lenders were postponed until the IMF meeting in Washington.
European creditors’ position, as again enunciated by German FinMin Wolfgang Schauble last week, is that Greece should concentrate on implementing reforms and conditions of the third bailout, while the debt can wait all the way to 2022.
The IMF, which has emerged as the “strictest” taskmaster amongst the four lenders, nevertheless maintains that Greece’s debt-to-GDP level must be reduced in any way possible in order to meet its own charter, i.e. ceasing lending to countries with non-sustainable debts.
While IMF chief Christine Lagarde this week admitted that mistakes were made in planning the Greek program, she nevertheless mostly blamed successive Greek governments from 2010 onwards for failing to “take ownership of the programs”.
