IMF makes final effort for a debt deal

Germany and the International Monetary Fund are engaged in a last-ditch effort to bridge their differences and end the impasse so that a deal can be reached on the easing of Greece’s debt that will allow for the immediate participation of the IMF in the Greek program.

The head of the Fund’s European program, Poul Thomsen, arrived in the Belgian capital on Tuesday for a series of contacts with eurozone officials, and according to sources has also visited Berlin in the last few days to meet with German Finance Minister Olaf Scholz.

As a eurozone official told Kathimerini, “there is a certain convergence” of views, though not a deal as yet. The main disagreement is over the IMF wanting an automatic and front-heavy application of the debt-easing measures that would not be tied to political criteria. Berlin, on the other hand, wants the measures to apply gradually, and only after the fulfillment of Greece’s commitments and the approval of the German parliament.

The other difference, which it appears will be resolved soon by the two sides, concerns the extension of the loans’ maturity period: The Fund wants a 10-year extension while Berlin has now agreed to eight – against an original limit of five years.

“Time is running out for the IMF as it has to make the decision to activate its program for Greece,” a senior eurozone official said on Tuesday, refusing to say categorically whether Thursday’s Eurogroup meeting is the final deadline for the issue. The same source added that “we will get down to more details than in Sofia, but it remains to be seen whether the IMF activates its program.” It is clear that for the Fund to participate in a program with reviews, its board will have to make this decision by early June.

The same eurozone official explained that it is important for the credibility of the Greek program and the country in the post-bailout era that the IMF activates its program; even if it does not do so, it will continue to participate normally in the surveillance process after the bailout program ends.

Asked about the chances of the IMF’s participation, European Commission Vice President Valdis Dombrovskis did not express much optimism to Handelsblatt newspaper, saying various participation versions are being examined.